Business Desk 
Aug 01, 2025
The government of Pakistan has announced the removal of a 5% tax on digitally ordered goods and services provided by foreign e-commerce platforms operating in the country, marking a significant policy reversal.
It is anticipated that well-known online marketplaces like Temu, SHEIN, and AliExpress will benefit from the ruling, which takes effect on Friday.
The federal government has used its authority under section 15 of the Digital Presence Proceeds Tax Act, 2025, to exempt digitally ordered goods and services from the Digital Presence Proceeds Tax if they are from outside Pakistan, the Federal Board of Revenue (FBR) announced in a notification.
"In exercise of the powers conferred by section 15 of the Digital Presence Proceeds Tax Act, 2025, the federal government is pleased to direct that 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 notification reads.
The action is anticipated to help a number of international businesses involved in the digital industry and is viewed as a calculated attempt to facilitate a trade agreement with the United States.
Although it is anticipated that the elimination of the 5% tax will result in lower prices on these platforms, customers will still be responsible for paying the 18% sales tax that is levied on these services.
For context, prices on these platforms skyrocketed after the budget was announced earlier this year, prompting the decision to remove the tax.
Although prices are unlikely to return to pre-budget levels because of the remaining sales tax, consumers should experience some relief from the reversal.
The event highlights the government's attempts to strike a balance between fiscal policies and the need to encourage economic expansion and draw in foreign capital.
Stakeholders will be closely observing how this policy change affects consumer behaviour and market dynamics as Pakistan's e-commerce industry develops.
