ISLAMABAD: The federal government is preparing to impose a capital gains tax (CGT) on cryptocurrency transactions as part of the upcoming Budget 2026-27, according to sources familiar with the proposal. The move aims to bring digital asset trading into the formal tax system while strengthening oversight of the rapidly growing cryptocurrency market in Pakistan.
Government Finalizes Taxation Framework for Digital Assets
After consultations with the International Monetary Fund (IMF), the government has finalized a proposal to expand the scope of Section 37 of the Income Tax Ordinance, 2001. Consequently, gains earned through cryptocurrency trading will fall within the tax net. Sources indicated that authorities may impose a tax rate ranging from 20 percent to 30 percent, although officials are expected to announce the final rate during the budget presentation on Friday.
Furthermore, a high-level government committee has prepared recommendations covering taxation, documentation, and regulation of cryptocurrency transactions. The committee has also proposed measures to identify unregistered market participants and improve compliance across the sector.
Authorities Target Undocumented Crypto Transactions
Officials believe the proposed framework will help document digital asset activity without significantly diverting investment from traditional sectors of the economy. Since cryptocurrency gains resemble profits from securities trading, authorities consider their taxation relatively straightforward.
Meanwhile, a report submitted by the Federal Tax Ombudsman (FTO) to the Federal Board of Revenue (FBR) highlighted the scale of cryptocurrency adoption in Pakistan. The report estimated that nearly nine million Pakistanis use cryptocurrencies, placing the country among global leaders in digital asset adoption.
Moreover, the FTO noted that substantial cryptocurrency-related activity currently operates outside the tax framework, resulting in undocumented and untaxed transactions. The report urged authorities to establish a regulatory regime that taxes digital assets, broadens the tax base, and generates additional government revenue.
The Ministry of Finance confirmed that consultations with industry experts and stakeholders on the proposed framework remain ongoing.
