The federal government is considering reducing the sales tax on hybrid vehicles after a recent increase led to higher prices for buyers.

Sources told RBN that a summary proposing a lower sales tax on the import and local supply of hybrid vehicles has been sent to the Finance Division for approval.

The move comes after the concessional tax rate on hybrid vehicles expired on June 30, 2026. With no extension announced in the Finance Act 2026, a significantly higher sales tax took effect from July 1.

Officials said the government now intends to restore tax relief to encourage the adoption of hybrid electric vehicles (HEVs) and electric vehicles (EVs), while easing the burden on consumers.

The higher tax was introduced through the Finance Act 2026 after hybrid vehicles were shifted to Schedule II of SRO 297(I)/2023 following the expiry of their tax concession.

The proposed reduction will require approval from the federal cabinet before it can take effect. If approved, it is expected to lower the tax burden on both imported and locally assembled hybrid vehicles.