FBR suggests 0.25% withholding tax on online buying and selling platforms

As Pakistan prepares its federal budget for FY2025–26, the Federal Board of Revenue (FBR) is looking to tighten tax measures on digital marketplaces in a bid to meet International Monetary Fund (IMF) requirements and broaden the country’s tax base. 

According to insider sources, the FBR has suggested raising the current 0.25% withholding tax on transactions made through online buying and selling platforms like 

• Daraz 

• OLX 

• Zameen 

• PakWheels

The proposed hike is part of a larger fiscal plan the FBR will present during negotiations with the IMF team, which begins its visit this week. 

These changes reflect the government’s need to maximize domestic revenue collection as it seeks financial support and policy alignment with the IMF. The new budget, expected to be finalized by June 2, will likely be shaped by these discussions. Officials say the final proposals will be reviewed by Prime Minister Shehbaz Sharif on May 15. 

Read more: FBR will now block current and savings bank accounts of non-filers

In another significant development, the FBR has recommended a phased withdrawal of the 10% super tax on large corporations. This move could offer relief to heavily taxed sectors like banking, cement, tobacco, and oil, where total tax rates have reached a staggering 39%. The FBR believes removing the super tax could help unlock over Rs. 200 billion currently tied up in legal battles. 

For the salaried class, the budget could bring welcome relief. Proposals suggest raising the monthly tax-free income threshold from Rs. 50,000 to Rs. 80,000, effectively exempting annual incomes up to Rs. 960,000 from taxation. 

However, not all proposals are favorable. A contentious plan to impose a 5% income tax on pensioners is being debated, drawing criticism from retired government employees and labor unions. 

To boost investment and manufacturing, the government is also considering withholding tax exemptions on raw material imports and reductions in property transaction taxes. While imported vehicles may benefit from duty relief, locally assembled cars with engines above 1300cc could face higher taxes. 

Despite these sweeping measures, officials admit that the ambitious Rs. 12.3 trillion revenue target remains elusive without bold reforms, improved compliance, and a firm commitment to digital taxation and fiscal discipline.