In a recent policy shift, the Federal Board of Revenue (FBR) of Pakistan has officially withdraw Digital Tax on goods and services ordered online from abroad. This decision, announced via notification on July 31, 2025, brings relief to millions of Pakistani consumers who frequently shop from international e-commerce platforms.
Earlier this year, under the 2025-26 Federal Budget, the government introduced the “Digital Presence Proceeds Tax Act 2025.” It applied a 5% fixed income tax on foreign companies selling products online to Pakistani customers. The aim was to expand Pakistan’s tax net and meet the revenue target set under its deal with the International Monetary Fund (IMF).
However, starting July 1, 2025, the FBR confirmed that this Digital Tax will no longer apply to digital goods and services imported from outside Pakistan. The official statement clarified that foreign individuals or companies providing services or products digitally to Pakistani customers are now exempt from this tax.
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This move is seen as a major relief for global e-commerce platforms like AliExpress, SHEIN, and Temu, which had previously operated in Pakistan without facing local taxes. These companies now continue to offer competitive prices to Pakistani buyers something that was under threat due to the new tax policy.
Impact on Local Businesses
While online shoppers welcomed the news, local retailers are concerned. Many argue that foreign platforms have an unfair advantage, as local sellers must pay up to 25% in taxes, while international platforms can now continue to operate tax-free. This, they fear, may hurt the already struggling local retail market.
Earlier, the government also reduced the duty-free limit on imported parcels from Rs. 5,000 to Rs. 500, further tightening e-commerce import rules. But with the withdrawal of the Digital Tax, it appears the government is trying to find a balance between consumer freedom and revenue generation.
What Lies Ahead?
While the Digital Tax removal may boost international online trade in Pakistan, it raises questions about long-term policies for fair competition. For now, however, online shoppers in Pakistan can enjoy tax-free purchases from abroad at least until a new framework is introduced.
