Govt to provide massive tax exemptions for electric vehicles in Pakistan

A cabinet meeting held today under Prime Minister Imran Khan’s supervision reviewed Pakistan’s overall political and economic strategy along with other developmental affairs, that concluded in the approval of the country’s first-ever Electric Vehicle (EV) policy.

The cabinet also gave the green light to the Mobile Manufacturing Policy and other decisions under consideration of the Economic Coordination Committee (ECC).

The Minister for Production and Industry Hammad Azhar, tweeted the following salient points of the EV policy for cars:

• 1 percent sales tax for locally made EVs up to 50 kwh and light commercial vehicles up to 150 kwh
• Duty on the import of charging equipment capped at 1 percent
• Federal Excise Duty (FED) does not apply to EVs
• Duty-free import of plant and machinery for the manufacture of EVs
• Removal of Additional Customs duty and Accounting Services and Tax (AST) on imports of EV cars
• For Manufacturers: only 1% tax on import of EV parts
• Registration & annual renewal fee waiver for EVs in Islamabad

The EV policy for two-wheel and three-wheel electric vehicles was approved last week during a meeting of the ECC in Islamabad that was chaired by the Minister for Finance and Revenue Dr. Abdul Hafeez Sheikh.

The ECC also ratified the electric vehicle policy for four-wheelers last week, in a move that Mr. Azhar described as “instrumental in rationalizing costs of purchasing, manufacturing and promoting use of electric vehicles in Pakistan”.

Regardless of whether the infrastructure will be sufficient to cater to the needs of the EV market in Pakistan, a huge paradigm shift within the local automotive industry seems imminent with the approval of the EV policy.