The Federal Board of Revenue (FBR) has said the digital proceeds tax on digitally ordered goods and services supplied from outside Pakistan will no longer apply with retrospective effect from July 1.
Last month, the government introduced new taxes on local and foreign e-commerce marketplaces, which made online shopping costlier for Pakistani customers. The government has also introduced new taxes on goods purchased online from outside Pakistan through the Digital Presence Proceeds Tax Act, 2025.
A notification issued by the FBR on Wednesday, and seen by Dawn.com, said: “The Digital Presence Proceed Tax shall not apply to digitally ordered goods and services supplied from outside Pakistan, by any person, which are chargeable to tax under the said act.”
The Digital Presence Proceeds Tax Act, 2025, had targeted online marketplaces that sell to Pakistani customers but have little to no physical presence in the country.
Under section 3 of the proposed law, every foreign vendor with a “significant digital presence in Pakistan” would have been charged a tax on goods sold online from outside Pakistan.
Typically, these vendors include online marketplaces such as AliExpress, Temu, and Amazon, among others.
Under the proposed law, customers would have been charged five per cent of the amount paid to the vendor for the purchase of goods from a foreign marketplace.
The tax would have been collected by banks, financial institutions, or payment gateways that facilitate transactions between customers and the online marketplace.
Customs were empowered to ensure that goods purchased online from foreign marketplaces were not delivered to customers unless the courier companies provided evidence of tax payment.