- July 20, 2026
- Posted by: Tresmark
- Category:
No Comments
The federal government is considering reducing the sales tax on hybrid vehicles from 25% to 18% for both imported and locally assembled models to encourage the adoption of cleaner vehicles.
According to sources, a summary has been submitted to the Finance Division seeking approval for the proposed tax cut.
The concessional sales tax rate remained in place until June 30, 2026, but expired automatically after it was not extended through the Finance Act 2026.
Under the Finance Act 2026, the sales tax on hybrid vehicles was increased from 8.5% to 25%, effective July 1, 2026, following the withdrawal of the previous tax concession.
Officials said the government has since reviewed the impact of the higher tax rate on the hybrid vehicle market and is now considering reducing it to 18%, subject to approval by the federal cabinet.
Currently, hybrid vehicles remain subject to 25% sales tax on both imports and local supply after being shifted to Schedule II of SRO 297(I)/2023 following the expiry of the earlier exemption.
