IMF tax push may make hybrid cars expensive

ISLAMABAD: The International Monetary Fund (IMF) urged Pakistan to scrap sales tax exemptions currently offered to locally manufactured hybrid and electric vehicles and bikes.

According to online reports, the global lender is seeking the imposition of a full 18 percent sales tax from the next fiscal year onwards.

Currently, locally assembled hybrid cars receive tax exemptions under the Eighth Schedule, which is scheduled to end on June 30, 2026.

At the end of 2025, the hybrids with engines up to 1800cc are taxed at just 8.5pc and between 1801cc and 2500cc at 12.75% sales tax.

During discussions with the Ministry of Industries and Production, the IMF insisted that these vehicles and bikes be removed from the Eighth Schedule, falling squarely under a standard tax regime.

This would end the preferential treatment that was given to promote cleaner, energy-efficient transportation in Pakistan.

Such a move might dramatically change the local hybrid vehicle market, which until now has flourished under reduced taxes.

A recommendation by the IMF sparked debates about the future of green vehicles in Pakistan, raising many questions on affordability and the government’s commitment to eco-friendly transport initiatives.