The Federal Board of Revenue (FBR) has discontinued the 5 percent Digital Proceeds Tax that was levied on all goods and services ordered digitally and provided outside Pakistan. It was an exemption granted under S.R.O. 1366(I)/2025 of Section 15 of the Digital Presence Proceeds Tax Act 2025.
This move means that digital payments for services like Google, Netflix, Apple, Temu, and AliExpress will no longer be subject to the 5% tax, provided the vendor is located outside Pakistan. The tax suspension applies to foreign-supplied digital goods and services, regardless of whether the vendor has a digital presence in the country.
This decision of the FBR is after the digital, and e-commerce sector had complained it would be an added burden to the consumers and small businesses in terms of their probabilities of taxation.
What the Suspension Covers:
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Purchase of all goods and services of digitally ordered products and services with foreign companies
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The amount charged by Pakistani users of streaming service providers, cloud- based software vendors, e commerce shops, and digital subscriptions
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There is no withholding tax by banks, payment gateway or courier services on such transactions
What Still Applies:
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The 2% final withholding tax remains applicable on domestic digital transactions under existing local e-commerce rules
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The suspension does not affect taxes on COD (cash on delivery) orders, local platforms, or digital payments within Pakistan
The FBR’s suspension of the 5% tax on foreign digital goods and services removes additional charges on international platforms accessed from Pakistan. Local taxes on domestic platforms remain unchanged.
