ISLAMABAD: Pakistan is considering reducing hybrid vehicle sales tax from 25% to 18%, but the proposal still requires federal cabinet approval.
The proposed reversal on July 20. ProPakistani said officials had forwarded a summary to the Finance Division for consideration.
The proposed hybrid tax cut cannot take effect without the federal cabinet’s approval. Officials announced there is no set date for the cabinet meeting or an implementation schedule for the proposal.
The 25% rate took effect on July 1, following the expiration of the previous concession on June 30. The change covered imported and locally supplied hybrid vehicles.
The affected vehicles were placed under Schedule II of SRO 297(I)/2023, according to the report. Pakistan later withdrew its draft Auto Industry Development Policy 2026-31 for revision.
That decision left hybrid vehicles facing the 25% rate. The Federal Board of Revenue’s sales-tax register showed no notification of a rate reduction by August 7.
The tax increase has already affected prices for several locally assembled hybrid models. Profit said Toyota raised the prices of the Corolla Cross hybrid by Rs1.314 million and Rs1.364 million.
The Corolla Cross HEV X reached Rs 10.299 million after the increase. Honda raised the price of its HR-V hybrid by Rs1.370 million to Rs10.369 million.
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However, the standard Corolla Cross HEV reached Rs9.849 million. These figures show some affected models exceed Rs 10 million, but the description does not cover every vehicle.
Reports said the proposed reduction aims to support fuel-efficient vehicles and provide relief to buyers. The proposed 18% rate would remain above the earlier 8.5% concession applied to certain locally assembled hybrids.
The International Monetary Fund’s May report noted Pakistan’s commitment to end preferential tax treatment. However, that report predated the proposed hybrid vehicle tax reduction and did not assess it.
