The International Monetary Fund (IMF) has recommended that Pakistan remove the sales tax exemption on locally made hybrid electric vehicles and motorcycles.
Currently, these vehicles benefit from tax breaks, but the IMF suggests they should be taxed at the standard 18% rate starting next fiscal year.
At present, hybrid vehicles under 1800 cc are taxed at 8.5%, while those between 1801 cc and 2500 cc are taxed at 12.75%. The government had extended tax relief for hybrid vehicles until June 2026, but under the IMF’s new proposal, this will be lifted in the next financial year.
This change is expected to raise prices for hybrid vehicles and motorcycles, which could affect both consumers and the local car industry.
