The Government of Pakistan has announced a broad set of new taxes targeting local and international e-commerce platforms, digital services, and social media advertisements. These changes, part of the Finance Bill 2025 and a newly proposed Digital Presence Proceeds Tax Act, will come into effect from July 1. The aim is to expand the country’s tax net by tapping into the fast-growing digital economy and boosting revenue at a time of fiscal pressure.
Under the new rules, all domestic e-commerce platforms will be required to pay tax on every sale made through websites, apps, or online marketplaces. Each digital transaction will also face a 2 percent sales tax, while an additional “digital payment tax” will be imposed based on the amount spent. Transactions of up to Rs10,000 will be taxed at 1 percent, while payments between Rs10,000 and Rs20,000 will be taxed at 2 percent. Transactions above Rs20,000 will carry a 0.25 percent tax. These taxes will be deducted automatically by payment gateways at the time of purchase.
For cash-on-delivery orders, courier services—including ride-hailing, food delivery, and logistics companies—will collect the tax from customers. The tax rate will vary depending on the type of item: 2 percent for clothing, 0.25 percent for electronics, and 1 percent for all other products. In a major regulatory shift, the government has also made it mandatory for all sellers to register under the Sales Tax Act, 1990 before they can sell products or services online. E-commerce platforms and courier companies will not be allowed to work with unregistered vendors, and failure to comply could lead to penalties of up to Rs1 million.
The government has also brought foreign e-commerce platforms into the tax net. Companies such as Amazon, AliExpress, and Temu, which sell goods to Pakistani consumers without having a physical presence in the country, will be taxed under the proposed Digital Presence Proceeds Tax Act, 2025. A 5 percent tax will be charged on all goods purchased from these platforms, and banks, payment gateways, and digital wallets facilitating these transactions will be responsible for collecting it. Customs officials will be empowered to withhold delivery of such items unless proof of tax payment is provided by the courier company.
In addition to goods, the new tax regime covers a wide range of digitally delivered services, including music and video streaming, cloud computing, telemedicine, e-learning, and online banking. A separate provision in the law targets digital advertising by foreign companies. Any foreign business that runs online ads targeting Pakistani users on platforms such as Facebook, Instagram, Google, or YouTube will be required to pay 5 percent of their gross ad spend as tax to the Government of Pakistan. These companies and their payment intermediaries must file quarterly reports showing how much tax has been collected and deposited. Failure to submit these statements will result in a fine of Rs1 million per quarter.
