The Federal Board of Revenue (FBR) announced on July 31, 2025, that the 5% Digital Proceeds Tax on digitally ordered goods and services supplied from outside Pakistan will no longer apply, effective from July 1, 2025. This decision provides relief to Pakistani consumers and e-commerce platforms by exempting foreign vendors from the tax introduced last month.
In a notification issued by the FBR, the Digital Presence Proceeds Tax Act, 2025, will not apply to digitally ordered goods and services imported from abroad. The tax had targeted online marketplaces like AliExpress, Temu, and Amazon, imposing a 5% levy on payments to foreign vendors with a significant digital presence in Pakistan.
Under the original law, banks, financial institutions, or payment gateways would collect the tax, and customs could withhold delivery until proof of payment was provided. This exemption applies retroactively from July 1, 2025, easing the burden on consumers who faced higher costs for online purchases from international sellers.
پاکستانیوں کیلئے خوشخبری، حکومت کا یوٹرن، پاکستان سے باہر سے منگوائی جانے والی آن لائن چیزوں وغیرہ پر ٹیکس ختم ۔۔۔
اب TEMU وغیرہ سے چیزیں پھر سے سستی ہو جائیں گی۔ pic.twitter.com/6mLi85mvB9
— Gharidah Farooqi (T.I.) (@GFarooqi) July 31, 2025Background on the Digital Proceeds Tax
Introduced last month, the tax aimed to regulate foreign e-commerce platforms with minimal physical presence in Pakistan. It required foreign vendors to pay taxes on sales to Pakistani customers, collected through transaction facilitators. The move was part of broader efforts to address trade imbalances but led to increased costs for local buyers.
The withdrawal aligns with recent trade developments, including exemptions for U.S. firms, potentially facilitating a bilateral trade deal. This change is expected to lower costs for online shopping from foreign platforms, benefiting Pakistani consumers amid rising inflation.
However, it may impact government revenue from digital imports. Businesses relying on international e-commerce could see improved competitiveness.
