Digital Presence Proceeds Tax Act, 2025

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THE DIGITAL PRESENCE PROCEEDS TAX ACT, 2025 
 
 
 
 
CONTENTS 
Chapter I __ Preliminary  
1. Short title and commencement 
2. Definitions 
Chapter II __ Chargeability and Scope 
3. Charging of Digital Presence Proceeds Tax 
4. Significant digital presence in Pakistan 
Chapter III __ Collection and Recovery 
5. Responsibility to Collect Digital Presence Proceeds Tax 
6. Responsibility to collect digital presence proceeds tax on advertisement at social media 
platform 
7. Failure to deduct or deposit collected tax and recovery along with default surcharge 
Chapter IV __ Reporting Requirements 
8. Furnishing of information of e-commerce transactions by Online Payment Intermediaries 
9. Furnishing of information by social media and online platforms regarding advertisement 
Chapter V __ Penalty and Suspension 
10. Penalty for non-filing of statement 
11. Suspension of remittances to a Foreign Advertiser 
 
Chapter VI __ Appeals 
12. Appeals 
 

 
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Chapter VII __ Miscellaneous 
13. Administration of this Act 
14. Power to make rules 
15. Power to grant exemption 
Schedule 
  
 
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THE DIGITAL PRESENCE PROCEEDS TAX ACT, 2025 
1ACT No. XIX of 2025 
[27th June, 2025] 
An 
Act 
for the enactment of Digital Presence Proceeds Tax Act, 2025 
Whereas the rapid digitization of the global economy has fundamentally transformed 
traditional business models, enabling multinational enterprises particularly those in digital sector to 
generate substantial revenues and profit from jurisdictions where they maint ain little or no physical 
presence; 
AND Whereas the current international tax framework, designed in the early 20 th century, 
relies on concepts of physical presence and permanent establishment that fail to capture the value 
created through digital interactions, user data, and intangible assets within market jurisdiction; 
AND Whereas this misalignment has resulted in significant tax base erosion for nations, as 
profits generated from local users, data, and digital engagement are shifted to low -tax jurisdictions, 
undermining fiscal sovereignty and the principle of "value creation" as t he cornerstone of equitable 
taxation; 
AND Whereas objection to Digital Service Tax overlook the failure of existing rules to adapt 
to the digital economy and the legitimate right of nations to safeguard their revenue until a unified 
solution is achieved. 
Now, therefore, the introduction of Digital Presence Proceeds Tax Act, 2025 stands as 
necessary, justified and proportionate measure to ensure tax fairness and protect public revenue. 
It is hereby enacted as follows;__ 
Chapter I __ Preliminary 
1. Short title and commencement.__ (1) This Act shall be called the Digital Presence Proceeds 
Tax Act, 2025. 
(2) It shall come into force at once. 
2. Definitions.__ In this Act, unless there is anything repugnant in the subject or context,__ 
(a)  “Authority” means the Commissioner Inland Revenue who has been assigned 
jurisdiction for the purposes of this Act by the Federal Board of Revenue; 
(b)  “Board” means the Central Board of Revenue established under the Central  
1Enacted vide section 12 of the Finance Act, 2025 (Act No. XIX of 2025). 
 
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 Board of Revenue Act, 1924 (IV of 1924), and on the commencement of Federal 
Board of Revenue Act, 2007, the Federal  Board of Revenue established under 
section 3 thereof and includes a Member of the Federal Board of Revenue to 
whom powers of the Board have been delegated under section 8 of the Federal 
Board of Revenue Act, 2007; 
(c)  “digitally delivered services” means any service delivered over the internet or 
electronic networks, where the delivery is automated and required minimal or 
no human intervention including music, audio and video streaming services, 
cloud services, online software application services, services delivered through 
online inter -personal interaction i.e. tele -medicine, e -learning etc., online 
banking services, architectural design services, research and consultancy 
reports, accounting services in the form of digital files or any other online  
facility; 
(d)  “e-commerce” means sale or purchase of goods and services conducted over 
computer networks by methods specifically designed for the purpose of 
receiving or placing of orders either through websites, mobile applications or 
online marketplace  having digital ordering features by using either mobile 
phones or automated computer-to-computer ordering system; 
(e)  “e-store” means the online platform including websites and software 
applications used to conduct e -commerce, which involves buying and s elling 
goods or services including digital products, through electronic transactions 
over the internet or other computer networks; 
(f)  “online marketplace ” means Online interfaces that facilitate, for a fee, the 
direct interaction between multiple buyers and multiple sellers for digital orders 
for supply of goods and services, without the platform taking economic 
ownership of the goods or rendering the services that are being sold; and 
(g)  “payment Intermediary ” means any third part entity including a banking 
company, financial institution, a licensed foreign exchange company or 
payments gateway that facilitate the transfer of funds or payment instructions 
between two or more parties to enable, process, route or settle payments in a 
financial transaction, without being the ultimate source or recipient of the 
payment. 
Chapter II __ Chargeability and Scope 
3. Charging of Digital Presence Proceeds Tax.__ (1) Every foreign vendor having significant 
digital presence in Pakistan shall be charged to Digital  Presence Proceeds Tax on proceeds of every 
supply made from outside Pakistan of digitally ordered services or goods irrespective of whether 
delivered digitally or physically. 
(2) The tax under sub-section (1) shall be charged at the rate provided in the Schedule of this 
Act. 
 
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(3) Proceeds of foreign vendors are attributable to Pakistani users based on their significant 
digital presence in Pakistan as provided in section 4 of this Act, where__ 
(i)  the transaction is carried out through foreign online marketplace or e-store; 
(ii)  they arise in connection with digitally ordered services and goods; and 
(iii)  a Pakistani user is a party to the transaction. 
(4) Any reference to a Pakistani user, in relation to this Act means any user who is reasonable 
to assume__ 
(a)  in the case of an individual, is normally resides in Pakistan; 
(b)  in the case of a company, is established or have permanent establishment in 
Pakistan; and 
(c)  the payment for the digital order of services and goods has been electronically 
paid from within Pakistan. 
(5) This section shall not apply to any payment for__ 
(a)  digitally ordered goods where such payment is effectiv ely connected with a 
branch office of foreign vendor in Pakistan of the non -resident person and the 
goods are supplied from within Pakistan; and 
(b)  digitally delivered services where such services giving rise to the payment are 
received in Pakistan and are rendered through a branch office of foreign vendor 
in Pakistan of the non-resident person. 
4. Significant digital presence in Pakistan .__ A foreign vendor shall have significant digital 
presence in Pakistan under this Act, where the foreign vendor supplies digitally ordered services and 
goods from outside Pakistan to any user in Pakistan, if the aggregate amount exceeds one million 
rupees in a financial year along with one of the following additional factors__ 
(a)  existence of a user base and the associated data input; 
(b)  billing or collection in local currency or with a local form of payment; 
(c)  responsibility for the final delivery of  goods and services to Pakistani 
consumers; 
(d)  responsibility for the provision by the foreign vendors of other support services 
(aftersales services, repairs and maintenance); and 
(e)  continued marketing and sales promotion activities, online or not, t o attract 
customers. 
  
 
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Chapter III __ Collection and Recovery 
5. Responsibility to Collect Digital Presence Proceeds Tax .__ (1) Every payment 
intermediary including a banking company, financial institution, licensed exchange company or 
payment gateway responsible for making a payment in whole or part remitting outside Pakistan, the 
proceeds chargeable to tax under section 3 of this Act, to a foreign vendor for digitally ordered services 
or goods shall deduct tax from the gross amount paid at the rate specified in Schedule to this Act. 
(2) Notwithstanding anything contained in any law, the payment intermediary shall not 
maintain any bank account for a foreign vendor supplying goods or services from outside Pakistan and 
remit funds outside Pakistan unless the deduction of the tax under this section has been made and 
deposited in the government treasury as provided in sub-section (1) of this section: 
Provided that this sub -section shall not apply where the payment intermediary collects and 
deposit this tax at the time of remitting any payment outside Pakistan. 
(3) Every payment intermediary who has deducted the tax under this section in a month is 
required to deposit the deducted amount in the government treasury before the 7 th of immediately 
succeeding month. 
(4) Notwithstanding anything contained in any law, Customs shall ensure that no courier 
delivers any consignment unless provide the evidence of payment of this tax at the time when its 
payment has been settled by the buyer and seller under sub-section (1) of this section. 
6. Responsibility to collect digital presence proceeds tax on advertisement at social media 
platform.__ (1) Every foreign vendor having digital presence in Pakistan making any payment in whole 
or part to social media plat forms or any other online platform for online advertisement in Pakistan 
which is chargeable to tax under section 3, shall deduct tax from the gross amount paid at the rate 
specified in the Schedule of this Act. 
(2) Every foreign vendor who has deducted the tax under this section in a month is required to 
deposit the deducted amount in the government treasury before the 7 th of immediately succeeding 
month. 
7. Failure to deduct or deposit collected tax and recovery along with default surcharge.__ 
(1) Where a__ 
(a)  payment intermediary fails to collect tax as required under section (1) of section 
5; 
(b)  payment intermediary fails to comply with the provisions of s ection (2) of 
section 5; 
(c)  foreign vendor fails to comply with the provisions of section 6; or 
(d)  having collected tax under sub -section (3) of section 5 or sub -section (2) of 
section 6 fails to deposit the tax to the Commissioner, the payment intermediary 
of foreign vendor, as the case may be, shall be personally liable to pay the 
amount of tax along with default surcharge @ of KIBOR +3% per annum for 
 
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the days of default and the Authority under this Act may pass an order to that 
effect and proceed to recover the same. 
(2) No recovery under sub-section (1) shall be made unless the person referred to in sub-section 
(1) has been granted with an opportunity of being heard. 
(3) For recovery of the demand created under this Act, the Part IV of Chapter X of Income Tax 
Ordinance, 2001 (XLIX Of 2001) regarding tax recovery shall apply mutatis mutandis. 
Chapter IV __ Reporting Requirements 
8. Furnishing of information of e -commerce transactions by Online Payment 
Intermediaries.__ (1) Every payment intermediary responsible for collection of tax in respect of 
remitting proceeds to foreign vendors under section 5 of this Act shall file a quarterly statement in the 
manner as prescribed to the Commissioner Inland Revenue containing foreign vendor wise information 
regarding all payments related to e -commerce transactions of sale of digitally ordered services and 
goods including as follows__ 
(a)  name of the purchaser, its identification number (CNIC) and address of the 
foreign vendor to whom payments have been made from which tax has been 
collected under section 5 and section 6; 
(b)  transaction date, unique identifier (invoice number) and total trans action value 
from which tax has been collected under section 5 and section 6; 
(c)  the total amount of tax deducted from the seller under section 5 and section 6; 
and 
(d)  any other particular may be prescribed. 
(2) Every payment intermediary maintaining bank account for foreign vendors with digital 
presence in Pakistan shall file a quarterly statement in the manner as prescribed to the Commissioner 
Inland Revenue containing information regarding total credit amount in the bank account during t his 
period in the account of foreign vendor and the amount remitted outside Pakistan. 
9. Furnishing of information by social media and online platforms regarding 
advertisement.__ Every social media and online platform having digital presence in Pakistan is 
required to file a quarterly statement in the manner as prescribed providing client-wise information of 
local vendors or foreign vendors with or without a permanent establishment whose advertisements are 
relayed in Pakistan through its platform and the amount received. 
Chapter V __ Penalty and Suspension 
10. Penalty for non -filing of statement .__ Where every payment intermediary and social 
media platform, who fails to submit the statement required under section 8 or section 9 of this Act, 
with respect to digitally ordered services and goods or advertisements relayed in Pakistan shall be 
liable to a penalty of one million rupees for each default. 
 
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11. Suspension of remittances to a Foreign Advertiser.__ The payment intermediary shall 
suspend the remittances of proceeds of such foreign vendors if it is reported to them by Commissioner 
that such vendors are advertising continuously for one hundred and twenty days without the payment 
of this tax by the foreign vendor: 
Provided that this suspension shall be in addition to the recovery under section 7 for violation 
of section 6. 
Chapter VI __ Appeals 
12. Appeals.__ (1) A person dissatisfied with any order of recovery under this Act can file an 
appeal with the Appellate Tribunal Inland Revenue within thirty days from the receipt of the order. 
(2) Within sixty days of the receipt of the order of the Appellate Tribunal  Inland Revenue an 
aggrieved person or the Commissioner may prefer a reference in the prescribed along with the 
statement of the case and complete record of the appellate tribunal to the High Court stating any 
question of law arising out of such order. 
Chapter VII __ Miscellaneous 
13. Administration of this Act .__ The Inland Revenue Department of the Board and its 
subordinate offices shall act as tax administrator for the carrying out the purposes under this Act. 
14. Power to make rules.__ The Board may prescribe rules for the purposes of giving effect to 
the provisions of this Act and for the removal of any difficulty or matter ancillary thereto. 
15. Power to grant exemption.__ The Federal Government may, by notification in the official 
Gazette, subject to such conditions and restrictions as may be specified therei n, exempt any country, 
any class of goods or services and class of persons from the chargeability under this Act, as deemed 
appropriate. 
Schedule 
[See section 3(2)] 
 
 The tax rate for collection for cross-border transactions of digitally ordered goods and services 
shall be as under. 
S. No. Description Rate of Tax 
(1) (2) (3) 
1. Services 5% of the payment including of advertisement on social media platforms 
2. Goods 5% of the payment made to foreign provider 
 
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RGN Date: 07-07-2025