MoF urges ministries to implement taxation measures

MUSHTAQ GHUMMAN

ISLAMABAD: The Ministry of Finance has urged the concerned ministries to ensure implementation of taxation measures agreed with the International Monetary Fund (IMF) under Resilience and Sustainability Finance (RFF) including imposition of carbon levy of Rs5 per litre on gasoline and diesel, well-informed sources told Business Recorder.

According to the Ministry of Finance, the following actions have been agreed with IMF for the RSF. The commitments pertaining to Petroleum Division and Ministry of Industries and Production, as agreed with the IMF.

The sources said, as per the agreement, carbon levy will be imposed by end June 2025. This will include a supplementary carbon levy levied through the PDL on gasoline and diesel of Rs5 per litre, which will be phased in over two years.

As part of this reform, fuel oil will be added to the PDL, with the base and supplementary rate applicable to it.

The scope, phasing and level of the supplementary carbon levy will be legislated through the FY26 Finance Act.

Future Finance Acts will be able to raise the carbonbeyond this initial rate as required.

Another commitment is electric vehicle (EV) adoption by June 2025.

As part of the FY26 budget law, the government will adopt a revenue-neutral scheme comprising a subsidy for EVs and a supplementary tax on internal combustion engine vehicles, in line with the draft NEVP 2025-2030.

“We will continue to implement the scheme in subsequent fiscal years over the course of the RSF programme,” the sources quoted Finance Ministry as saying in its communication with the concerned ministries.

The sources said, another commitment was EV charging stations by end February 2027, adding that to incentivise private sectorinvestment in EV charging stations, the government will adopt a Viability Gap Funding (VGF) framework that (i) provides one-off subsidies; (ii) ensures sufficient competition through an open bidding process andincludes clear criteria to evaluate the eligibility of projects for gap funding: and (iii) implements the first bid window.

The Finance Ministry is of the view that with the support of the Asian Development Bank (ADB) or International Finance Corporation (IFC), the government will ensure that the VGF framework andrules are consistent with international good practices and minimize contingent liability risks to the government. In addition, we will publish tender documents and the list of bidders and successful bidders for all bid windows. The sources further stated that Finance Ministry has requestedconcerned ministries to ensure timely implementation of the agreed RMs under the RSF.