FBR eyes Rs65bn from e-commerce tax measures

Tax is proposed on Google and YouTube with purpose of convincing them to open their offices in Pakistan

By Mehtab Haider
June 18, 2025
An undated image of the Federal Board of Revenue (FBR) building in Islamabad. — APP/File
An undated image of the Federal Board of Revenue (FBR) building in Islamabad. — APP/File

ISLAMABAD: The FBR’s proposed two taxation measures on domestic e-commerce and international platforms flooding their goods in Pakistan will fetch additional revenues of Rs65 billion in the budget 2025-26.

Previously, fees of advance tax on offshore digital services were 10 percent, which have now been proposed to be 15pc. This tax has been proposed on Google and YouTube with the purpose of convincing them to open their offices in Pakistan.

Withdrawal of exemption on import of solar panels and parts with imposition of 18pc GST will yield additional revenues of Rs20 billion. However, PPP is extending full-fledged opposition to block approval of GST on solar panels. If parliament does not grant its assent, the government will have to propose some alternate measures to bring Rs20 billion into the national kitty.

Both income tax and sales tax have been slapped on digital platforms through different means. To tax international e-commerce flooding their goods in Pakistan, FBR proposed Digital Presence Proceeds Tax to fetch Rs39 billion with effect from July 1.

Taxing domestic e-commerce business through both Income Tax and Sales Tax will fetch Rs26 billion into the national kitty.

In the budget 2025-26, FBR slapped additional taxation measures of Rs312 billion. Major revenue spinner is to increase rates of advance tax on rendering of services which will bring an additional Rs70 billion.

Withdrawal of GST exemption on imports and supplies for erstwhile FATA/PATA will fetch an additional Rs30 billion. The FBR’s move to slap increased tax rate on profit on debt will cough up Rs56 billion. The proposal to withdraw exemption on pension will help FBR to collect additional Rs2 billion. Withdrawal of lower GST rate on local motorcars, having engine capacity of 850cc, will bring an additional Rs7 billion in the budget for 2025-26. Increase in tax rates on advance tax on payments to Non Residents will fetch Rs10 billion. Rationalisation of second schedule will bring an additional Rs19 billion.