ISLAMABAD: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has demanded an immediate rollback of the sales tax hike on hybrid vehicles, which jumped from 8.5 percent to 25 percent after tax concessions expired without a new auto policy in place.
Adeel Siddiqui, a member of the FPCCI Executive Committee, said in a statement that tax concessions on hybrid vehicles expired on June 30.
With no new auto policy notified in time, the Federal Board of Revenue (FBR) restored the general sales tax rate of 25 percent on hybrid electric vehicles and plug-in hybrid vehicles. This replaces the earlier preferential rates of 8.5 percent for hybrids up to 1800cc and 12.75 percent for those above 1800cc.
Siddiqui said automakers have temporarily halted production and suspended invoicing due to uncertainty over which tax rate applies. He said thousands of workers, vendors and transporters have been affected, with factory workers losing wages during the halt.
He said Pakistan imports about 80 percent of its petroleum products, making transport electrification a matter of national importance. He said the tax hike discourages fuel-efficient vehicles and prolongs dependence on imported fuel.
Siddiqui called for an immediate rollback of the 25 percent tax, or at minimum a reduction to 18 percent until a new auto policy is finalised. He demanded that the Auto Policy 2026-31 be notified without delay and called for a phased transition to clean energy, with incentives tied to local manufacturing and technology transfer.
He noted that the government is reportedly considering tax relief for vehicles priced above Rs10m even as hybrid taxes rise. He said the current policy risks slowing the shift to fuel-efficient vehicles, raising fuel import costs, and setting back an auto sector that was showing signs of recovery.
