IMF-Pak Talks Enter Final Stage as Auto Policy Differences Persist
ISLAMABAD: Negotiations between Pakistan and the International Monetary Fund (IMF) have entered their final stage, with discussions continuing on key outstanding issues, including the government’s proposed auto policy, sources said.
The IMF and Pakistani authorities are engaged in final talks, while differences over certain measures in the auto policy have yet to be fully resolved, according to sources familiar with the negotiations.
Pakistan, IMF Discuss EV Taxes and New Auto Policy
Pakistan and the International Monetary Fund (IMF) are discussing proposed tax changes for electric vehicles (EVs) as the government moves towards finalizing its new auto policy. The negotiations focus on sales tax rates, vehicle gift schemes and measures to support the development of the local automotive industry.
Sources said the government has yet to reach a final decision on imposing an 18% sales tax on electric vehicles valued up to $75,000. The IMF has reportedly proposed increasing the existing 1% rate to 18% for vehicles within this price range.
IMF Seeks Higher Sales Tax on Electric Vehicles
Pakistani authorities have argued that the lower sales tax rate encourages the adoption of environmentally friendly and energy-efficient vehicles. Officials said both sides had agreed in principle to apply a higher tax rate to expensive electric vehicles.
Under the reported proposal, EVs priced above $75,000 would attract a 25% sales tax instead of the standard 18% rate. However, the final tax structure remains subject to the outcome of ongoing negotiations.
The discussions also cover the government’s vehicle gift scheme. Pakistani authorities have assured the IMF that vehicles imported or transferred under the scheme would not be allowed to change ownership for one year, according to sources.
Pakistan’s Auto Policy 2026–31 Nears Final Approval
Pakistan’s five-year Auto Industry Development Policy (AIDEP) 2026–31 is nearing final cabinet approval. The previous policy framework expired on June 30, 2026.
The proposed policy includes a four-tier tariff structure of 0%, 5%, 10% and 15%. It aims to rationalize import duties and reduce weighted average tariffs by 2030–31.
However, the proposed changes have sparked debate with local auto parts manufacturers over the potential impact of increased import competition.
The government has briefed the IMF on its proposals for the new auto policy. Officials are seeking to address the Fund’s concerns while maintaining incentives for electric vehicles and the broader automotive industry.
The outcome of the negotiations will help determine the final tax treatment of electric vehicles and other measures under the new policy. The discussions form part of Pakistan’s economic reform programme with the IMF.
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