With an eye on trade deal, Pakistan plans tax exemptions for US tech firms

ISLAMABAD: In a move to strike an expected trade deal with the Trump administration, the Federal Board of Revenue (FBR) has moved a summary for granting tax exemptions to US tech giants like Google and others from payment of 5 percent tax under the Digital Presence Proceed Act 2025.

Pakistan and the USA are inching closer to striking a tariff deal anytime till the deadline of August 1, 2025, under which both sides will grant tariff incentives to boost bilateral trade and investment on a reciprocal basis.

Earlier, the USA had imposed a 29 percent tariff in case of Pakistan, but now Washington seems ready to slash it down to the range of anywhere between 15 and 20 percent.

“A summary has been moved for seeking approval of Prime Minister Shehbaz Sharif and the federal cabinet for granting tax exemption to US tech like Google and others,” top official sources confirmed, but added that the approval was not yet granted till the filing of this report on Tuesday night. The sources said that a cabinet meeting was postponed and is now rescheduled for Thursday (tomorrow).

Pakistan’s Minister for Finance, Muhammad Aurangzeb, along with top relevant stakeholders, has been visiting the US with expectations that both sides would be able to strike a trade deal in the next 48 to 72 hours.

One top official of the government told The News on condition of anonymity that Pakistan was vying for securing a competitive advantage over economies like Bangladesh, India, and Vietnam through this trade deal with the USA, and it could help Islamabad to jack up its exports of few billion dollars in coming years.

“We cannot negotiate Free Trade Agreement (FTA) with USA because of stringent conditions,” said the official and added that some sort of Preferential Trade Agreement or Bilateral Trade Treaty might be on the cards and Islamabad was ready to give assurances for non-reversal of tariff incentives after the completion of the IMF programme.