ISLAMABAD: Major tax exemptions have been provided by the Federal Cabinet to promote the promotion of the country’s four-wheeler electric vehicles (EVs).
The overview transmitted by the Ministry of Industry has been authorised by the cabinet, allowing a one percent sales tax of up to 50 kWh for locally produced EVs and up to 150 kWh for light commercial vehicles (LCVs). The cabinet also reduced the import duty to 1pc for charging machines.
At the same time, the Federal Excise Duty (FED) would also exclude EVs, while supplies of plants and equipment for the manufacture of such vehicles will also be duty-free.
Additional customs duties (ACD) and accounting services and taxes on EV imports were further withdrawn by the government.
As per the scheme, only 1pc of the import tax for producers of EV parts will be charged. The government has also waived registration and annual renewal fees for EVs in Islamabad, apart from the tax facilities.
The ECC had previously ratified last week’s four-wheeler EV scheme, rationalising the expense of buying, processing and encouraging the country’s use of EVs.
Proposals concerning the EV programme (four-wheelers) have been finalised by the Inter-Ministerial Committee formed by the Federal Cabinet and the fiscal incentives will remain in place until 30 June 2026. The ECC has already approved a policy for two-wheeler and three-wheeler EVs.
As per the documents, individuals involved in manufacturing EVs (two- and three-wheelers and heavy commercial vehicles) may be encouraged by policy interference which could not be protected in the EV Policy (two- and three-wheelers and FICVs) authorised by the Economic Coordination Committee meeting held on June 10 earlier this year.
A waiver of ACD and value added tax was suggested until 30 June 2025 for imports of entirely built-up EVs (two- and three-wheelers and HCVs).
The delay in finalising the four-wheeler proposal was partly due to the inherent complexity of the policy and the lengthy consultative period with existing suppliers of original equipment.
At a formative point, EV technology is comparatively pricey viz-a-viz conventional fuel vehicles. Via numerous technological and monetary benefits, including the disbursement of direct financial subsidies, policymakers around the world are seeking to make this technology accessible.