In a significant policy shift, the Government of Pakistan has abolished the 5% tax on digital goods and services provided by international tech and e-commerce firms, including Google, Facebook, Amazon, Netflix, and Alibaba, under the Digital Proceeds Act.
A formal notification issued by the Federal Board of Revenue (FBR) confirms that the tax exemption will come into effect from July 1, 2025, and will apply to goods and services ordered digitally from abroad. This includes transactions made on popular platforms like Daraz, AliExpress, Teemo, Apple iTunes, and Shopify.
The decision effectively withdraws the digital tax on a wide array of online services, social media companies, and tech platforms, responding to growing pressure from international stakeholders. Notably, the American Chamber of Commerce had raised concerns over the tax, prompting a review by the Pakistani government.
Last year alone, Pakistani consumers made online payments exceeding Rs 312 billion, highlighting the rapid growth of the digital economy and its impact on global trade dynamics.
The move is being seen as a strategic attempt to attract foreign investment, improve ease of doing business, and align Pakistan with global digital commerce norms, especially amid efforts to expand the country’s tech footprint and digital services sector.
Reporter: Waqas Azeem