IMF Opposes Pakistan’s Sales Tax Exemption for Electric Vehicles
The International Monetary Fund (IMF) has raised objections to Pakistan’s proposal to exempt electric vehicles (EVs) from sales tax, emphasizing that tax policies should align with standard regulations, Express News reported on Wednesday.
According to sources, the IMF specifically opposed tax concessions under Pakistan’s EV policy, particularly the exemption on local sales of EV components.
The Ministry of Industries and Production had suggested the tax relief to encourage EV adoption, but the IMF insisted that sales tax on raw materials used in electric vehicles should not be waived.
Meanwhile, Pakistan and the IMF continue discussions on climate financing, now entering their third round of negotiations.
Talks are also planned regarding EV charging infrastructure and tariff adjustments, with Pakistani authorities expected to update the IMF on their goal of setting up 3,000 charging stations by 2030.
A technical delegation from the IMF arrived in Islamabad on Monday to engage with Pakistani officials on climate financing and related policy measures. The team is working with federal and provincial authorities to evaluate strategies for green budgeting, tracking mechanisms, and climate funding.
These discussions, scheduled to conclude by February 28, will assess Pakistan’s progress in climate adaptation and financing.
One key topic on the agenda is the proposed introduction of a carbon levy in the federal budget for the 2025-26 fiscal year, with the IMF set to provide recommendations on its implementation.
Additionally, the negotiations cover subsidies, EV policies, and the expansion of green budgeting, with Pakistani officials expected to outline the country’s current climate initiatives and future sustainability plans.
The IMF delegation’s visit is part of broader efforts to align Pakistan’s financial policies with global climate commitments while ensuring sustainable economic reforms.
