Karachi: In a move that could severely impact Pakistan’s growing renewable energy sector, the government is considering raising the sales tax on solar panels from 10% to 18%, as part of a broader Rs. 200 billion contingency plan agreed with the International Monetary Fund (IMF).
According to a report by The Express Tribune, the tax hike will be triggered if the Federal Board of Revenue (FBR) fails to meet its December-end revenue targets or if government spending exceeds agreed fiscal limits.
The potential increase on solar imports is part of a package that also includes higher taxes on mobile calls, cash withdrawals, and processed foods. The move has sparked concern among industry experts who warn it could discourage solar adoption and slow Pakistan’s clean energy transition at a time when the country is facing record electricity tariffs and climate challenges.
Other proposed measures include raising the standard sales tax rate to 19%, doubling the withholding tax on cash withdrawals for non-filers to 1.5%, and increasing taxes on cellular and landline calls.
The solar industry, already burdened by fluctuating import policies and delays in net-metering regulations, fears that the proposed 8% tax increase could push renewable solutions further out of reach for consumers and undermine national energy security goals.
Officials say the government aims to recover half of the Rs. 200 billion in new taxes during January–June 2026, subject to IMF approval and fiscal performance reviews.
