Revision of duties, taxes on EVs import: Ordinance aimed at amending ST Act, other laws under study

ISLAMABAD: The government is planning to promulgate a Presidential Ordinance to rationalise duties and taxes on the import of electric vehicles. The plan also includes abolition of three percent additional sales tax on the import of electric vehicles and its parts in CKD kits.

Sources told Business Recorder Tuesday that the proposed Ordinance would amend the federal tax laws including Sales Tax Act, 1990.

The Ordinance would be promulgated as soon as the National Assembly and Senate would prorogue.

The Ordinance is expected to waiver off other taxes already approved by the Cabinet to facilitate promotion of four-wheeler electric vehicles (EVs) in the country.

Cabinet had approved the removal of additional customs duty and three percent additional sales tax on imports of EV cars.

In December 2020, the Ministry of Industries had prepared a summary for the cabinet allowing one percent sales tax for locally-made EVs up to 50 kWh and light commercial vehicles (LCVs) up to 150 kWh.

The duty on import of charging equipment was also capped at one percent.

It was proposed that the EVs will also be exempt from federal excise duty (FED), whereas, the import of plant and machinery for manufacturing of these vehicles would also be duty-free.

As per the policy, there will be only one percent tax on import of EV parts for manufacturers.

Apart from the tax facilities, the government has also waived registration and annual renewal fee for EVs in Islamabad.

The waiver of additional customs duty (ACD) and value-added tax on imports of completely built-up EVs (two- and three-wheelers and HCVs) has been proposed till June 30, 2025.

Copyright Business Recorder, 2021