Pakistan's government has approved huge tax exemptions on four-wheeler electric vehicles. Image Credit: Supplied

Islamabad: The Pakistan government announced new measures encouraging the use of electric vehicles (EVs) as part of ab ambitious shift towards clean energy and emission-free future.

The federal cabinet has approved huge tax exemptions on four-wheeler electric vehicles, Federal Minister for Industries and Production Hammad Azhar confirmed. (The policy for two-wheeler and three-wheeler EVs was also approved earlier.)

One of the major incentives is 1 per cent sales tax for locally developed EVs of up to 50 kwh and light commercial vehicles (LCVs) up to 150 kwh. The cabinet also capped the duty on import of charging equipment at 1 per cent, and removed additional customs duty (ACD) on import of electric vehicles. The import of plant and machinery for the manufacturing of these vehicles would also be duty-free.

Domestic thrust

There will be only 1 per cent tax on the import of EV parts for manufacturers in an attempt to boost local production. The government has also waived registration and annual renewal fee for EVs in Islamabad to promote the adoption of eco-friendly cars in the city.

30% by 2030

Pakistan’s ministry of climate change has earlier announced to switch over to 30 per cent electric vehicles by 2030 under the National Electric Vehicles Policy. Climate Change Advisor Malik Amin Aslam has said that electric vehicles will “revolutionise” the transportation industry in Pakistan and reduce the import bill by $2 billion every year. 

Recently, Pakistan announced battery-powered electric buses in Islamabad in collaboration with a European electric bus company in a bid to shift the public transport towards cleaner energy.

Highlights of Pakistan’s EV policy:

• Federal excise duty (FED) removed on EVs

• Additional customs duty and additional sales tax slashed on imports of electronic vehicles

• Only 1% tax on imports car parts for manufacturers

• Registration and annual renewal of electric cars free for residents of Islamabad capital territory.

• Sales tax reduced to 1% for electric cars between 50kwh and 150kwh that are made in Pakistan

• Import of EV charging equipment capped at 1%

• Duty free import plant and machinery for manufacturing of EVs.