Pakistan scraps 5% digital tax on foreign tech companies and e-commerce platforms

In a relief for online shoppers, the federal government has decided to remove the recently imposed 5% digital tax on foreign e-commerce platforms such as Temu, SHEIN, and AliExpress, making digital shopping a bit more affordable for millions of Pakistanis. 

The announcement was made through a notification issued by the Federal Board of Revenue (FBR) under the Digital Presence Proceeds Tax Act, 2025. The notice clarified that the 5% levy would no longer apply to digitally ordered goods and services supplied from outside Pakistan. 

The decision comes after weeks of complaints from consumers who saw sharp price hikes on global platforms following the budget announcement. The rollback, according to officials, is also linked to Pakistan’s ongoing efforts to finalize a trade deal with the United States, which demanded easing certain digital trade barriers. 

“In exercise of the powers conferred by section 15 of the Act, the federal government is pleased to direct that the tax shall not apply to digitally ordered goods and services supplied from outside Pakistan,” the FBR notification read. 

Read more: Pakistan grants Google exemption from newly imposed digital tax

Impact on Shoppers 

For consumers, this means a welcome dip in prices of fashion, gadgets, and lifestyle products sourced from popular global platforms. However, experts caution that prices won’t return entirely to pre-budget levels since the 18% sales tax introduced earlier still remains in place. 

“Shoppers will see some relief, but the overall cost is still higher than before because of the sales tax,” a senior tax consultant explained. 

E-commerce in Pakistan has been growing at a fast pace, and the foreign platforms are capturing a significant share of the market. Analysts keep on believing that the move to waive the 5% tax depicts the government’s recognition of the sector’s importance in providing affordable consumer goods, particularly at a time when inflation and purchasing power remain pressing issues. 

AS the rollback was effective on July 1, 2025, consumers can now expect to see gradual adjustments in prices, providing at least partial relief to those who solely rely on digital marketplaces for affordable shopping.