Iran Gov’t Announces Hybrid Vehicle Tax Incentive

The Iranian National Tax Administration says value-added tax would be exempted on hybrid electric-petrol cars.

According to the website of the Presidential Office for Science and Technology, local companies are exempt from paying VAT on such products. The VAT rate for the current fiscal that ends in March is 9%.

According to the INTA statement, the move is aimed at “boosting production” of electric-petrol hybrids that several local companies are in the process of developing.

While such incentives for the production of EVs is helpful and worthy of praise, experts are hesitant about its success because they say Iran does not have the technology and infrastructure to produce such vehicles.

They also rightly point out that Iran does not have a single electric charging station.  In the past the government tried to introduce CNG hybrid cars as a “cleaner substitute” to gasoline-powered vehicles. However, the hybrids produced by IKCO and SAIPA have turned out to be of low quality and unable to meet local emission standards.

Add to this that the limited number of CNG fueling stations has been a nuisance to car owners who normally have to spend precious time waiting in long queues to get a refill.

It is not certain how incentives like VAT breaks and other tax exemptions can or will affect the struggling auto industry and reduce the worsening air pollution in the bigger cities.

Government bodies, local carmakers and universities have announced programs for the production of EVs and some have created prototypes.

A knowledge-based firm affiliated with the Islamic Azad University, Qazvin Branch, has developed one vehicle named ‘Yooz’ and produced several units. The EV was test-driven by President Hassan Rouhani on the occasion of National Clean Air Day on Jan. 22.

Iran’s Electric Vehicles Center (EVC) operating under the auspices of the Energy Ministry has designed a hybrid gasoline-electric car, based on Iran Khodro’s Runna platform.

Iran Khodro seems to be aware of what lies ahead. IKCO public relations manager, Morteza Aghaei said in September, “The company has signed a deal with universities, government bodies and the Italian company Pininfarina to produce hybrids and electric cars.”

Hybrid electric cars are available in Iran through imports, namely the Toyota Prius and Volvo XC90. The official representative and production partner of China’s BYD in Iran, Karmania says it has plans for assembling an all-electric 5-seat family wagon, the BYD E6.