ISLAMABAD: The federal government has introduced a brand-new law, the “Digital Presence Proceeds Tax Act 2025,” to tighten control over the digital economy and ensure transparent tax collection.
Under the new system, digital transactions must be reported on time, or violators could face fines of up to Rs1 million.
If anyone fails to pay the digital tax on time, they will be charged the original amount plus interest and an additional 3 per cent penalty.
As per the law, foreign traders who don’t pay taxes in Pakistan will no longer be allowed to maintain local bank accounts.
Moreover, if any foreign digital company continues to run ads in Pakistan without paying taxes for 120 days, remittances sent to them from Pakistan will be blocked.
The new tax regime also requires that third parties collect taxes on digital services and online sales.
Financial institutions must submit tax returns every three months.
If they fall short of this requirement, they’ll be slapped with fines up to Rs1 million.
In addition, social media platforms involved in advertising will also be required to file quarterly tax returns.
Tax collectors must deposit the tax for each month by the 7th of the following month.
The entire process will be overseen by Inland Revenue Commissioners, each responsible for their assigned area.
In case of any objection, affected parties can file an appeal with the Inland Revenue Appellate Tribunal within 30 days.
This new law aims to plug tax leaks, bring digital transactions under the tax net, and crack down on those dodging their responsibilities in the digital economy.
