Sales tax on local electric vehicles slashed from 17% to 1%

electric vehicles

Under the Auto Industry Development and Export Policy (AIDEP 2021-26), the government decided to offer a number of tax incentives to electric vehicles and hybrids.

The programme intends to promote small automobiles, localization, incentivize the launch of new goods in tractors and motorbikes, consumer protection, and promote new technologies like as EVs and hybrids to target export markets, according to the initial document.

The Engineering Development Board of the Ministry of Industries and Production released a document that stated that custom duty on specific parts of electric vehicles has been set at 1%. Sales tax on local electric vehicles (EVs) has been reduced from 17 percent to 1 percent.

Read more: Govt eyes 70% electricity generation from renewable sources by 2030

Customs duty on completely built-up (CBU) electric vehicles was reduced to 10% from 25% under the policy, while duty on particular parts of electric vehicle motorcycles, three-wheelers, and heavy commercial vehicles was set at 1%.

Since the sales tax was cut to 8.5 percent, hybrid manufacture was also authorized under the vehicle policy. Customs duty on particular parts for hybrid EV and plug-in hybrid EV will draw 4% and 3%, respectively, according to the document.

The board has also decided to reduce regulatory duty on CBU import of hybrids (15% for above 1,800cc, 0% for 1,800cc and below).

Furthermore, the policy draft stated that car imports would be prohibited if they did not meet safety standards.

As per the policy, no car will be imported or assembled, which is not compliant with shortlisted WP 29 regulations after June 2022. It also means that cars without airbags can no longer be assembled or imported in Pakistan.

“After June 30, 2022, no vehicle shall be locally manufactured/imported that is not compliant with the shortlisted WP 29 regulations,” the new paper stated.

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