Pakistan may impose up to 25% sales tax on electric vehicles

Islamabad: The government is expected to introduce significant changes in the upcoming budget, proposing a sales tax of up to 25% on imported electric vehicles (EVs). Current tax exemptions for EVs, including those on CKD kits used by local manufacturers, are set to expire on June 30, 2026. Presently, these incentives support small EV cars, SUVs with up to 50 kWh batteries, and light commercial vehicles (LCVs) up to 150 kWh, with a 1% sales tax applied to locally assembled units. In contrast, hybrid electric vehicles already enjoy reduced tax rates of 8.5% to 12.75%, which are expected to remain unchanged. The move may impact import demand and pricing in the EV market, while encouraging local assembly and policy compliance.