Paraguay proposes phasing out tax exemptions for electric and hybrid vehicles

The National Directorate of Tax Revenues (DNIT) in Paraguay has proposed a gradual reduction of the current 100% tax exemption for electric and hybrid vehicles. The proposal, presented to the Ministry of Economy and Finance, aims to phase out the benefit through 2033, at which point these vehicles would be subject to standard taxation.

Under the new plan, the Value Added Tax (IVA) for these vehicles would initially be set at 5% instead of the general 10% rate, decreasing incrementally over time. DNIT head Óscar Orué noted that the measure is not the imposition of a new tax, but rather the removal of an existing exemption. He argued that hybrid vehicles, which maintain internal combustion engines, should not receive the same tax treatment as pure electric vehicles.

The measure is estimated to generate approximately US$ 30 million in additional revenue. The proposal must now be sent to Congress for final definition. The potential change has already drawn concern from sectors such as the Federation of Platform Drivers.