ISLAMABAD: The Federal Board of Revenue (FBR) has officially announced the implementation of a New Energy Vehicle (NEV) adoption levy, targeting internal combustion engine (ICE) vehicles to encourage the transition to electric and energy-efficient alternatives.
Under the new tax framework introduced through the First Schedule of the Finance Act, a tiered ad valorem levy will be applied to both locally assembled and imported ICE vehicles based on engine capacity.
For vehicles with an engine capacity below 1300CC, manufacturers will be charged a 1% levy based on the invoice price, including duties and taxes. Importers of the same category will pay 1% of the assessed value.
Vehicles with engine capacities ranging between 1300CC and 1800CC will be subject to a 2% ad valorem levy for both locally produced and imported units. The rate increases to 3% for vehicles exceeding 1800CC, again applicable to both local assembly and imports.
The levy also extends to heavy vehicles. Imported buses and trucks with combustion engines will incur a 1% tax, while the same rate applies to locally assembled counterparts.
The NEV levy aims to disincentivize traditional fuel-based vehicles in favor of environmentally friendly alternatives, supporting Pakistan’s broader climate goals and aligning with global shifts in vehicle electrification.
This move marks a significant policy shift, reinforcing the government’s strategy to promote clean energy adoption in the transportation sector while generating additional revenue from conventional vehicle use.
