ISLAMABAD – Freelancers in Pakistan are now paying the price of aggressive taxation, as new regulations in Budget 2025 bring total deduction to 13percent for those using SadaPay and other online mediums to get their payments.
The country’s digital economy has been hit by a recent tax policy that introduces 5pc levy on international digital transactions from July 1. The new taxes, called “digital presence tax,” sparked frenzy among those earning freelancers, creators, and entrepreneurs who rely on cross-border payments.
As PMLN-led government is making all-out efforts to rake in taxes from all sectors, the new tax specifically targets individuals and businesses engaged in international digital commerce, including those who receive payments through online platforms.
Those earning online say sudden change has not only added their woes but also added confusion over how the tax is applied.
Some digital professionals operated under an 8pc fixed tax rate via regulated channels like Sadapay, which streamlined payment management. The new digital presence tax, however, adds an extra layer of taxation, raising the effective rate to as much as 13% in some cases, without clear guidelines from authorities.
These additional taxes could discourage digital entrepreneurship and hamper efforts to grow its IT exports. The country’s freelance sector has become one of the largest in the world, contributing millions of dollars annually in foreign exchange.
Amid the confusion, e-commerce and other online business owners are looking at government to reconsider the structure of the tax.
