National Assembly Approves Digital Presence Proceeds Tax Act, 2025
The National Assembly Standing Committee on Finance and Revenue has approved the Digital Presence Proceeds Tax Act, 2025, introducing a 5% tax on foreign vendors selling goods online in Pakistan. The Act, shared in a session chaired by Syed Naveed Qamar, specifically targets foreign e-commerce sellers who supply goods to Pakistani customers without a physical presence in the country.
Tax Collection Mechanism
Under the new law:
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Banks and financial intermediaries will deduct the tax when payments are made to foreign vendors.
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The tax will apply to platforms like Temu, which reportedly earned Rs 4 billion from Pakistani customers without paying local taxes.
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Digital ads from global platforms (e.g., Google) promoting foreign vendors will also be taxed, aligning with international digital tax practices.
Impact on Local E-Commerce Industry
The move is expected to benefit Pakistan’s domestic e-commerce sector by:
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Leveling the playing field between local sellers (who already pay taxes) and foreign platforms that previously enjoyed a tax-free advantage.
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Encouraging price parity, fostering the growth of Pakistani e-commerce platforms.
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Boosting local entrepreneurship and investment in domestic tech infrastructure.
Following Global Trends
Pakistan’s decision aligns with international measures, as countries like India, France, and the UK have imposed similar digital taxes to capture revenue from foreign digital businesses operating in their markets.
Future Implications
While foreign service providers remain exempt for now, the law sets a precedent for expanding tax coverage as the digital economy grows. This move signals Pakistan’s commitment to a structured and fair taxation system for digital commerce, strengthening national economic interests and creating new opportunities for local businesses.