Despite issuance of electrical vehicle (EV) policy for two and three-wheelers, non-issuance of Statutory Regulatory Orders (SROs) for customs duty and sales tax has put potential investors in a dilemma.

According to a notification issued by the Federal Board of Revenue (FBR) on February 3, 2021, to amend SRO 572(I)2020, there will be no more additional customs duty on the import of electric vehicles falling under Pakistan Customs Tariff (PCT) codes 8703.8030 (electric auto rickshaw), 8711.6040 (electric motorcycle), and 8711.6060 (three-wheeler electric-loader).

Even though the government of Pakistan has taken steps to promote electric vehicle technology in the country, the revenue board has exempted additional customs duty on the import of electric two and three-wheelers up to June 30, 2025.

However, it did not mention anything regarding the import duty on EV two and three-wheelers, said Pakistan Electric Vehicles Manufacturers Association (PEVMA) Chairman Sabir Shaikh while talking to The Express Tribune.

“We are left with some questions, which are, what is the current import duty on completely built units (CBUs) of two and three-wheelers? What is the rate of withholding and income tax at the import of the CBUs? What is the sales tax on import of CBUs of the bicycles and tricycles?” he stated.

“If we import fuel engine motorcycle, we have to pay 50% customs duty,” highlighted Shaikh. “For example, if a bike is priced at Rs100,000, the importer will pay Rs50,000 for the purchase to the government on account of customs duty.”

The additional custom duty stands at 1% ie Rs500, however, according to the policy for the electrical vehicle, customs duty on electric vehicles will be charged half of what is charged for the fuel engine vehicles, the chairman said, adding, “For example, if the government is charging 50% for fuel vehicles it would charge 25% for the import of an electrical vehicle.”

The government has not issued SRO for the 50% customs duty, so whoever imports the electrical vehicle motorcycle they have to pay the same customs duty, said Shaikh. “The government was supposed to mitigate this anomaly by issuing SRO for the duty; however, it has issued SRO only for additional customs duty of 1%, which is practically next to none.”

It seems that the actual situation is not conveyed properly to the higher officials, although Prime Minister Imran Khan and his team have been quite vocal in their support for electric vehicles, said Shaikh. “The notification released is discouraging the investors and a potential green revolution in the country.”

Published in The Express Tribune, February 7th, 2021.

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