Foreign Tech Giant Raises Alarm Over Pakistan’s New Tax on Digital Services
The Asia Internet Coalition (AIC), representing global digital platforms, has raised serious concerns over Pakistan’s proposed “New Digital Presence Proceeds Tax Act, 2025”, introduced via the Finance Bill on June 10.
AIC stated that the proposed tax, like other Digital Services Taxes (DSTs), is a unilateral and discriminatory step aimed at taxing foreign digital companies. The coalition emphasized that this measure violates international tax norms, contradicts Double Taxation Avoidance Agreements, and could result in multiple taxation of the same income due to a lack of credit mechanisms in other jurisdictions.
The coalition warned that the Digital Presence Proceeds Tax (DPPT) would disproportionately impact foreign companies, create serious tax uncertainty, and discourage foreign investment in Pakistan.
Pakistan, a participant in the OECD/G20 Inclusive Framework on BEPS, had committed to a global consensus on fair taxation, which includes rolling back DSTs. However, the move to introduce DPPT undermines that process. AIC pointed out that other regional players—such as India (which has withdrawn its 6% Equalisation Levy from April 1, 2025) and New Zealand (which dropped its DST bill in May 2025)—are stepping back from such unilateral tax measures.
AIC has urged the Government of Pakistan to avoid rushing such a potentially damaging law and instead launch a transparent and inclusive consultation process involving all relevant stakeholders.
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