Islamabad [Pakistan]: The International Monetary Fund (IMF) has rejected Pakistan’s proposal to exempt electric vehicles (EVs) from sales tax, insisting that tax rates should align with standard fiscal policies, The Express Tribune reported.
The global lender has raised concerns over tax concessions outlined in Pakistan’s EV policy, particularly the exemption on the local sale of EV components. According to sources cited by The Express Tribune, the IMF stressed that the sales tax on raw materials for EVs should not be removed.
Pakistan’s Ministry of Industries and Production had recommended the tax relief to accelerate EV adoption. However, the IMF opposed the move, arguing that such exemptions could disrupt tax revenue structures.
Currently, Pakistan and the IMF are engaged in their third round of negotiations on climate financing. Discussions include electric vehicle charging stations and tariff adjustments, with the Pakistani government aiming to develop 3,000 charging stations by 2030.
A technical delegation from the IMF arrived in Islamabad on Monday to hold talks on climate financing policies. Their focus includes reviewing Pakistan’s climate financing strategies, green budgeting, and tracking mechanisms.
The talks, set to conclude on February 28, will assess Pakistan’s progress on climate adaptation and financial reforms. A key item on the agenda is the potential introduction of a carbon tax in the 2025-2026 federal budget. The IMF is expected to provide recommendations on the tax’s implementation and framework.
Beyond the EV sector, negotiations also cover climate subsidies and green budgeting policies. Pakistani officials will present briefings on current climate initiatives and future environmental 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.