IMF rejects tax relief proposal in EV policy

No new exemptions for EV sector, Fund insists on standard taxation

ISLAMABAD:

The IMF has rejected the proposed tax relief in Pakistan's electric vehicle (EV) policy, opposing any sales tax concessions on locally sold EV parts, sources revealed on Wednesday.

The global lender has advised that the tax rates in the new EV policy should remain aligned with standard taxation norms.

It has also opposed tax exemptions on raw materials used in EV manufacturing, emphasising that no future tax concessions should be introduced for the sector.

The IMF officials have further stated that local supplies and sales of EV components should not be exempted from sales tax, ruling out any additional tax relief for electric vehicles.

It is pertinent to mention that the Ministry of Industries and Production had proposed sales tax exemptions on EV manufacturing to promote the sector.

Additionally, sources disclosed that the IMF delegation has also demanded reforms in electricity efficiency and power subsidies.

Discussions on EV charging stations and the Oil and Gas Regulatory Authority's (OGRA) tariff adjustment mechanism are scheduled to take place as part of ongoing negotiations.

A technical delegation from the IMF is holding discussions with federal and provincial authorities from February 24 to 28. The negotiations will cover green budgeting, climate spending, tagging, tracking, and reporting mechanisms.