The federal government has decided to bring e-commerce businesses into the tax net under the 2025-26 budget. Individuals and companies selling goods or services online will now be subject to taxation. Finance Minister Muhammad Aurangzeb announced this policy while presenting the Rs. 17,573 billion budget in the National Assembly.
To regulate digital transactions, the government has introduced the Digital Presence Proceeds Tax Act 2025. This law will ensure that online sellers pay taxes on their earnings. Additionally, taxes will apply to online orders for goods and services. E-commerce businesses must submit monthly transaction data and tax reports to relevant authorities.
The finance minister explained that Pakistan’s current tax system does not effectively cover cross-border e-commerce. Many foreign vendors sell products through websites and apps, using cash-on-delivery services. However, under existing tax agreements, foreign companies without a permanent business presence in Pakistan are exempt from income tax.
To address this issue, the government plans to introduce a new tax law targeting foreign sellers operating in Pakistan’s digital market. Banks, financial institutions, and payment platforms will be required to collect a 5% tax on digital payments made to foreign vendors.
The government believes these measures will increase tax revenue and ensure fair competition between traditional retailers and online businesses. Officials also stress the need for global tax agreements to regulate cross-border digital trade.