The National Assembly Standing Committee on Finance and Revenue has approved the Digital Presence Proceeds Tax Act, 2025, which introduces a 5% tax on foreign vendors selling goods online to Pakistani customers without having a physical presence in the country.

Chaired by Syed Naveed Qamar, the committee confirmed that the tax will be deducted by banks and financial intermediaries at the time of payment to these vendors. This will impact platforms such as Temu, which reportedly generated Rs. 4 billion in revenue from Pakistani consumers without paying local taxes. Additionally, digital advertisements promoting such vendors on global platforms like Google will also fall under this tax structure, bringing Pakistan in line with international digital taxation standards.

Support for Local E-Commerce
The new law is expected to benefit the local e-commerce sector by ensuring fair competition. Local businesses, already subject to domestic taxes, may now be able to compete more effectively with untaxed foreign platforms that previously enjoyed a pricing advantage.

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Experts suggest that this tax could help create price parity between domestic and international sellers, stimulate investment in local tech infrastructure, and foster entrepreneurship within Pakistan’s growing digital economy.

Following examples set by countries like India, France, and the UK, Pakistan’s move represents a strategic step in regulating the digital market and capturing revenue from international platforms profiting from local consumers.

While foreign service providers are currently exempt from this tax, the law lays the groundwork for broader digital taxation policies in the future.