Local E-commerce to Get Boost After Approval of 5% Tax on Foreign Sellers & Google Ads
The National Assembly Standing Committee on Finance and Revenue has approved the Digital Presence Proceeds Tax Act, 2025, introducing a 5% tax on foreign vendors selling goods online in Pakistan. The Act, shared in a session chaired by Syed Naveed Qamar, applies specifically to foreign e-commerce sellers who supply goods to Pakistani customers without having a physical presence in the country.
Under the proposed law, banks and financial intermediaries will deduct the tax when payments are made to such vendors. This includes platforms like Temu, which reportedly earned Rs 4 billion from Pakistani customers without paying any local tax. Digital ads from global platforms like Google promoting such vendors will also be taxed, aligning with international digital tax practices.
A Boost for Local Sellers and Fair Competition
This decision could mark a positive shift for the local e-commerce industry. By leveling the playing field, local sellers who already pay domestic taxes may now find it easier to compete with foreign platforms that previously enjoyed a price edge due to tax-free operations.
Experts say that price parity between local and international e-commerce players can foster the growth of Pakistani platforms, boost local entrepreneurship, and encourage investment in domestic tech infrastructure.
The move follows a global trend, where countries like India, France, and the UK have imposed similar digital taxes to capture revenue from international platforms monetizing their local markets.
While foreign service providers remain exempt under this Act for now, the legislation sets a precedent for expanding tax coverage as the digital economy evolves.
With this move, Pakistan signals a more structured and fair approach to taxing digital commerce, potentially opening new opportunities for local e-commerce players and reinforcing national economic interests.
