ISLAMABAD – Pakistan is set to bring foreign and local digital vendors into the tax net under the “Digital Presence” Proceeds Levy Act 2025 in budget 2025-26.
Under the law, a 5 per cent levy will be imposed on payments made to companies such as Amazon, Google, Netflix, and Temu and local e-commerce platforms like Daraz supplying goods or services digitally to consumers in the country.
Banks and payment gateways involved in processing remittances to foreign vendors will deduct the levy at the time of payment and submit quarterly reports to the Federal Board of Revenue (FBR).
The proposed Act also includes platforms such as online marketplaces and e-stores that facilitate digital transactions without taking ownership of the goods.
The FBR is trying to bring digital transactions within the scope of the tax regime. The idea is to enforce local tax laws on international platforms operating in the country.
Non-compliance with the filing or payment requirements will result in a penalty of Rs 1 million for each default. Additionally, a surcharge at a rate of 3pc above KIBOR per annum will be applied on overdue amounts.
Recovery of unpaid levies will follow the procedure outlined in the Income Tax Ordinance, 2001. Authorities will block outward remittances to foreign vendors processed via local banks for non-compliance.
