Islamabad, Pakistan | July 31, 2025 — In a significant policy reversal, the Government of Pakistan has withdrawn the 5% Digital Presence Proceeds Tax (DPPT) previously levied on foreign technology companies and digital platforms providing goods and services into the country. The Federal Board of Revenue (FBR) issued the exemption on Wednesday, July 30, making it retroactive from July 1, 2025, the date the tax initially took effect.
The DPPT, introduced under the Finance Act 2025, was designed to broaden Pakistan’s tax net by including offshore digital vendors operating with a significant digital footprint but no physical presence in the country. However, the decision to withdraw the tax comes amidst high-level trade discussions, coinciding with Finance Minister Muhammad Aurangzeb’s visit to Washington. This move is widely seen as a goodwill gesture aimed at easing trade tensions and fostering progress in ongoing bilateral trade negotiations, particularly with the United States.
The exemption applies to all non-resident entities and is expected to benefit major international tech giants, including Google (which was already clarified as exempt due to its physical branch in Pakistan), Meta, Amazon, Microsoft, and Netflix. The tax had covered a broad spectrum of digitally delivered services, from online advertising and software to streaming, remote education, and healthcare.
While the government acknowledges a potential substantial revenue shortfall from this waiver, discussions are underway to manage the fiscal impact and maintain macroeconomic stability. This policy shift underscores Pakistan’s commitment to fostering a favorable environment for foreign investment, ensuring continued access to digital services, and strengthening its trade relations on the global stage.
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