The International Monetary Fund (IMF) has rejected Pakistan’s proposed sales tax exemption on electric vehicles (EVs), stressing that the tax rates should remain in line with standard policies, The Express Tribune reported.
The IMF has raised objections to tax concessions under Pakistan’s EV policy, especially the exemption on the local sale of components of electric vehicles, The Express Tribune reported, citing sources.
Pakistan’s Ministry of Industries and Production had recommended the tax relief to boost EV adoption. However, the global lender opposed the decision and stressed that sales tax on raw materials for EVs should not be removed, as per the report.
Currently, Pakistan and the IMF are engaged in negotiations on climate financing, with discussions now in their third round. Talks between the two sides are also scheduled on electric vehicle charging stations and tariff adjustments, with Pakistan government set to brief the IMF on the country’s target of developing 3,000 charging stations by 2030.
A technical delegation from the International Monetary Fund (IMF) reached Islamabad on Monday to hold talks with Pakistani officials on climate financing and related policy measures. The aim of IMF team is to hold talks with authorities to review climate financing strategies, including tracking mechanisms and green budgeting.
The discussions set to take place until February 28, aim to assess progress of Pakistan on climate adaptation and financing. One key agenda item of the meeting is the proposed introduction of a carbon tax in the federal budget for the 2025-2026 fiscal year, The Express Tribune reported.
The IMF will give its recommendations on its implementation and framework. The negotiations cover EVs, subsidies and enhancing green budget. Officials are expected to give briefings on current climate initiatives of Pakistan and future plans. The IMF delegation’s visit is part of broader efforts to align Pakistan’s financial policies with global climate commitments, ensuring sustainable economic reforms.
