The Federal Board of Revenue (FBR) is likely to exempt Google from the newly introduced 5% digital tax announced in Pakistan’s federal budget for fiscal year 2025–26.
According to official sources, Google may also receive an income tax concession, reducing its rate from the standard 15% to 5%, under the provisions of the new Digital Presence Proceed Act. The Act targets foreign digital companies operating in Pakistan without a physical presence but earning significant revenue.
FBR explained that because Google has a registered office in Pakistan, new digital laws of taxation do not apply to Google. The Act will benefit digital companies without physical existence in Pakistan that might be providing their services to Pakistanis such as Meta, Amazon, Microsoft, and Netflix.
Sources further confirmed that prior to the budget, Google was already paying a 15% income tax. Post-budget, the FBR is reportedly considering a reduction to 5%, stating that Google’s main operations are based outside Pakistan.
Additionally, FBR has offered Google a full income tax exemption if the company shifts its branch office to a Special Economic Zone (SEZ).
Google currently operates in Pakistan through services including online advertising, cloud computing, search engine, communication, and digital entertainment.
