ISLAMABAD: The Federal Board of Revenue (FBR) has abolished the newly introduced Digital Presence Proceeds Tax, confirming that it will no longer apply to foreign-supplied digital goods and services from July 1 onwards.
The announcement comes just weeks after the government unveiled a set of new taxation measures targeting both local and foreign e-commerce platforms, which had sparked concerns among online shoppers and digital businesses.
In a notification issued Wednesday, FBR said:
“The Digital Presence Proceeds Tax shall not apply to digitally ordered goods and services supplied from outside Pakistan, by any person, which are chargeable to tax under the said act.”
The Digital Presence Proceeds Tax Act, 2025, originally aimed to impose taxes on foreign vendors conducting digital sales in Pakistan without having a physical presence in the country.
Under Section 3 of the Act, international e-commerce players — such as AliExpress, Temu, and Amazon — with a “significant digital presence” in Pakistan were to be taxed 5% on the value of goods sold. The tax was to be collected via banks, financial institutions, and payment gateways processing payments between Pakistani customers and foreign sellers.
Additionally, customs authorities were empowered to withhold delivery of online-purchased items until courier companies could provide proof of tax payment.
The FBR’s latest notification reverses this aspect of the law, signaling relief for consumers who were facing higher costs on foreign online purchases, and for digital retailers who feared operational disruption due to complicated compliance.
The move is expected to ease pressure on digital commerce and encourage cross-border trade, while giving policymakers time to reassess implementation of taxation on the digital economy.
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