Key Takeaways
- Tax incentives for New Energy Vehicles (NEVs) could result in Rs. 150 billion in annual revenue loss.
- Abdul Rehman, former chair of the Pakistan Association of Automotive Parts and Accessories Manufacturers, questioned the scale of the incentive.
- Rehman suggested a focus on electric buses, motorcycles, and public transportation for broader economic benefits.
Pakistan’s tax incentives for New Energy Vehicles (NEVs) could result in a significant annual revenue loss of Rs. 150 billion, according to Abdul Rehman, former chairperson of the Pakistan Association of Automotive Parts and Accessories Manufacturers.
Rehman estimated that annual NEV sales could reach 50,000 units, with tax and duty concessions averaging about Rs. 3 million per vehicle, leading to the substantial revenue loss.
The government is providing favorable treatment to NEVs, including a flat 1 percent sales tax regime, while simultaneously seeking additional revenue from other areas of the economy.
Rehman questioned the scale of the incentive, stating, 'The scale of the proposed concession is also significant when compared with allocations for other sectors.'
He pointed out that the Higher Education Commission’s allocation for fiscal year 2025-26 is approximately Rs. 35 billion, making the estimated annual NEV tax concession more than four times that amount.
Rehman argued that the government should attach clear requirements to EV incentives if industrial development is the objective, including commitments related to localization, investment, and employment.
If the priority is wider adoption of electric mobility, incentives should target consumers who rely on motorcycles, rickshaws, and public transportation, he suggested.
The issue, according to Rehman, is not whether Pakistan should support electric vehicles, but how public resources should be allocated to achieve the greatest economic and social return.
He concluded that the scale and design of the current incentives warranted a broader review of the costs and benefits of the policy.
The scale of the proposed concession is also significant when compared with allocations for other sectors.
Abdul Rehman, Former chairperson of the Pakistan Association of Automotive Parts and Accessories Manufacturers
