The federal government has abolished the five per cent tax on goods and services ordered digitally from abroad, a move that is likely to benefit global tech giants such as Google and Chinese e-commerce platform Temu.
The development comes after the federal cabinet formally approved the decision on Tuesday. A notification has since been issued by the Federal Board of Revenue (FBR), confirming the withdrawal of the digital tax.
The change is part of the Finance Bill 2025, which has been passed by the Parliament.
According to the FBR, the exemption will come into effect from July 1, 2025.
The tax had previously been applied to digital services and goods purchased by Pakistani consumers from international vendors, as part of efforts to expand the country’s tax base in the rapidly growing digital economy. The FBR had estimated an annual revenue of Rs40 billion from this tax.
Earlier, Temu — a Chinese e-commerce platform — had raised prices for Pakistani customers by up to 300%, following the government’s decision last month to impose new indirect taxes on international online sellers.
The price hike drew criticism from consumers and highlighted the growing cost pressures on cross-border e-commerce in Pakistan.
