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The government of Pakistan has approved an 18% sales tax on the import of solar panels. This decision was a part of the budget for the fiscal year 2025-26, aiming to promote the domestic manufacturing of solar panels.
The primary objective behind this tax is to support Pakistan’s growing solar panel manufacturing industry. Local manufacturers have reportedly been struggling due to the influx of cheaper imported solar panels, particularly from the global market.
The government believes this tax will encourage local production, create employment opportunities, and reduce the country’s reliance on imports for renewable energy equipment.
The imposition of an 18% sales tax is expected to significantly increase the price of imported solar panels in Pakistan. Some stakeholders have previously warned that such a tax could raise prices by as much as 30%, making solar energy less affordable for households and businesses. This could potentially slow down the adoption of solar power in a country that has been rapidly increasing its solarization efforts.
It’s important to note that this new import tax is separate from existing taxes related to solar energy. Previously, the Federal Tax Ombudsman (FTO) had ordered that an 18% sales tax be applied to the gross amount of electricity supplied to solar net metering consumers by power distribution companies (DISCOs), rather than the net amount after accounting for self-generated power. This was to address revenue losses and ensure consistent tax collection.
