Govt Introduces Stricter Digital-Tax Measures to Expand Formal Economy

The Federal Board of Revenue (FBR) has announced new tax measures aimed at bringing the digital economy into Pakistan’s tax net in response to concerns that the formal retail sector is bearing an unfair tax burden compared to online sellers. Profit by Pakistan Today

Under the measures, online platforms and courier-services that do not remit taxes on digital transactions will face fines of up to Rs 500,000 for first-time violations, and up to Rs 1 million for repeat defaults. Profit by Pakistan Today The digital-tax framework includes a 2% tax on the gross value of supplies made through digital platforms (e-commerce, mobile apps) and higher withholding-tax requirements for non-filers supplying via online channels. Profit by Pakistan Today

These changes reflect a broader strategy to document the economy, reduce informal transactions, and ensure fair competition between conventional retail businesses and the growing digital-market sector. The move follows legislative changes under the Tax Laws (Amendment) Ordinance, 2025, which have granted FBR greater monitoring and enforcement powers — for example, authorising officers to be stationed at business premises. Dawn+1

Legal commentators, however, have raised concerns that some of these amendments may undermine taxpayers’ procedural rights and shift the balance of power heavily in favour of the tax authorities.