ISLAMABAD – The Federal Board of Revenue (FBR) has proposed a series of new taxation measures targeting domestic and international e-commerce platforms, aiming to generate an additional Rs65 billion in revenue under the upcoming Budget 2025-26.
According to official sources, the measures include both income tax and sales tax provisions for digital platforms operating in Pakistan or delivering goods to Pakistani consumers.
Increased Tax on Foreign Digital Services
In a significant move, the FBR has proposed raising the advance tax on offshore digital services from 10% to 15%, targeting global tech giants such as Google and YouTube. The intent, sources say, is to encourage these platforms to establish local offices in Pakistan, improving both compliance and oversight.
Additionally, the FBR has introduced the Digital Presence Proceeds Tax, aimed at taxing international e-commerce operations that cater to Pakistani markets without having a physical presence in the country. This measure alone is expected to bring in Rs39 billion, effective July 1, 2025.
Taxation of Domestic E-Commerce Platforms
Domestically, the government plans to levy both income tax and sales tax on e-commerce businesses, which is projected to yield Rs26 billion in new revenue. Officials say this reflects an effort to bring the booming online retail sector into the formal tax net.
Controversial GST on Solar Panels
Another high-impact proposal is the withdrawal of tax exemptions on solar panels and parts, with an 18% General Sales Tax (GST) to be applied. The move is expected to generate Rs20 billion; however, it has met strong resistance from the Pakistan Peoples Party (PPP), which has vowed to block the measure in Parliament.
In the event the GST on solar imports is rejected, the government may be forced to identify alternate revenue sources to meet the shortfall.
Broader Tax Measures Worth Rs312 Billion
The e-commerce taxation is part of a broader revenue effort, as the FBR aims to raise Rs312 billion through various fiscal measures in Budget 2025-26. These include:
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Rs70 billion: Higher advance tax on rendering of services
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Rs56 billion: Increased tax on profit from debt
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Rs30 billion: Withdrawal of GST exemptions in FATA/PATA
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Rs19 billion: Rationalisation of Second Schedule tax exemptions
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Rs10 billion: Higher advance tax on payments to non-residents
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Rs7 billion: Withdrawal of lower GST on 850cc local motorcars
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Rs2 billion: Removal of tax exemption on pensions
The new proposals reflect the government’s focus on broadening the tax base and improving revenue collection amid rising fiscal pressures. However, political opposition and public backlash, especially on measures affecting green energy and online platforms, may test the government’s ability to implement the full taxation package.
