IMF Pakistan Discuss Climate Financing EV Tax Relief
An IMF delegation arrived in Pakistan on Monday to discuss climate financing with the authorities.
The lender’s team objected to the proposed sales tax relief on electric vehicles and rejected the relief offered in the country’s electric vehicle policy, sources said.
The IMF team also opposed sales tax concession in local sales of the parts of electric vehicles, sources shared. The IMF officials suggested a routine tax rate in the new electric vehicles policy.
The team demanded that the authorities not offer any concession over the raw material used in the manufacturing of EVs including local supply and sale of automobile spare parts.
The delegation stressed that no extra tax relief can be offered for electric vehicles in the future, according to sources.
The Ministry of Industries and Production had proposed sales tax relief over electric vehicle manufacturing in the country.
Sources said that the third round of talks on climate financing will be held today. The talks are scheduled over charging stations for electric vehicles and the OGRA tariff adjustment mechanism.
The officials will brief the IMF team on site selection for 40 EV charging stations. The delegation will be briefed about the target of 3,000 charging stations up to 2030, sources earlier said.
Pakistani officials will also hold talks with the IMF delegation over the budgetary gas subsidy reforms, sources added.
The discussions with the visiting IMF team are expected to focus on green budgeting, climate spending tagging, tracking, and reporting.
The government is mulling over imposing a carbon levy for the fiscal year 2025-26.
The talks, which will continue until February 28, will also cover the carbon levy. Additionally, the IMF is set to propose measures to expand green budgeting in the next fiscal budget.
The negotiations will solely focus on climate change initiatives, with federal and provincial representatives briefing the IMF delegation on their respective climate action plans.
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