Federal Board of Revenue (FBR) has announced that the newly introduced Digital Presence Proceeds Tax will not apply to digitally ordered goods and services supplied from outside Pakistan.
According to an official notification (S.R.O. No. 1366(I)/2025) issued on July 30, 2025, under Section 15 of the Digital Presence Proceeds Tax Act, 2025, the exemption applies to all taxable digital supplies made by foreign entities. The notification states that this measure has been taken under the authority of the Federal Government.
“This notification shall come into force on and from the 1st day of July, 2025,” the FBR confirmed.
The order was signed by Dr. Najeeb Ahmad, Member (Inland Revenue Policy) and Additional Secretary.
The federal government has withdrawn the recently introduced five percent digital tax after taking the International Monetary Fund (IMF) into confidence, official sources confirmed.
We have removed the tax imposed on international companies doing e-commerce in Pakistan !
— Shaza Fatima Khawaja (@ShazaFK) July 31, 2025
Pakistan is open for business! #TechDestinationPakistan pic.twitter.com/jNjNWc5v9v
According to the Ministry of Finance officials, the tax was reversed to avoid discriminatory treatment, a concern raised by the IMF. The decision also came in the wake of opposition from the United States, which had objected to the imposition of the tax on American digital companies.
The five percent tax had been imposed in the recent Finance Bill on digitally ordered goods and services. However, through a new notification, the Federal Board of Revenue (FBR) announced the withdrawal of the tax, effective from July 1, 2025.
Officials said the government has not granted any new exemption but has simply reversed the new levy. The move is expected to benefit high-tech global companies from countries like the United States and China.
FBR's new move
Federal Board of Revenue (FBR) has decided that a new tax — called the Digital Presence Proceeds Tax — will not apply to goods and services ordered online from foreign companies.
This means if you use international apps or websites to order things like software, online subscriptions, or digital services, you won’t be charged extra tax under this new law.
The decision was made official through a government notification issued on July 30, 2025, and it has been effective from July 1, 2025.
Why this matters:
Relief for consumers and businesses:
People and companies in Pakistan who rely on international digital platforms like Google, Netflix, Amazon Web Services, Zoom, or online learning platforms won’t have to pay additional tax under this new law. This helps keep costs stable.
Support for freelancers and tech startups:
Many freelancers and digital entrepreneurs in Pakistan use foreign software tools for their work. This exemption means they can continue operating affordably, without added financial burden.
Encourages digital growth:
By not taxing foreign digital services, Pakistan sends a message that it wants to be open and supportive of digital innovation and international collaboration.
Boost to e-commerce and remote work:
In a country where remote work, freelancing, and online businesses are growing fast, this move helps keep the digital economy competitive and connected to global markets.
