Islamabad:
In an important concession to the United States to reach a commercial agreement, Pakistan exempt the 5%tax on Wednesday, which had imposed a month ago to foreign technology companies and online platforms on the supply of digitally ordered goods and services.
However, tax exemption is not specific for US technology companies The express trustee.
The FBR, the Nation’s tax collection authority, notified the exemption on Wednesday, the day of the Minister of Finance, Muhammad Aurengzeb, was in Washington to promote bilateral commercial conversations.
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“In the exercise of the powers conferred by section 15 of the Tax Law of the income of the digital presence of 2025, the federal government is pleased to direct that the tax on the income of the digital presence will not apply to the digitally ordered goods and services provided from outside Pakistan, by any person, which is taxable to tax under said law,” according to the FBR notification.
In addition, he added that the tax will be required with effect from the first day of July 1, 2025, the day the new law and fiscal year 2025–26 Budget entered into force.
A Pakistani delegation is currently in the United States to solve the pending problems that are hindering the bilateral trade agreement. It is the second visit of the Pakistani team in less than two weeks, with the aim of ensuring the commercial agreement that can address the concerns of the United States and, to a greater extent, protect the commercial interests of Pakistan.
The sources said that during the last round of commercial conversations held between the Minister of Finance of Pakistan and the Secretary of Commerce of the United States, Howard Lutnick, the United States had raised the 5% tax issue imposed on the budget, which was harming the technological giants of the United States.
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The exemption will cause billions of rupees in tax losses to Pakistan. The sources of the Ministry of Finance said that to address any concern of the International Monetary Fund, US authorities can speak directly to the fund. The United States is the largest shareholder of the IMF, which has just over 16%.
The Government had imposed the 5% digital income tax on the basis that cross -border electronic commerce by foreign suppliers remained largely without resuming in Pakistan due to limitations of tax treaties that required a permanent establishment for income taxes.
The FBR had informed the National Finance Committee of the Assembly Assembly that the Erosion Fiscal Base of the market jurisdictions was occurring as foreign companies used digital platforms to sell goods and services without physical presence.
Many countries have introduced digital services taxes (DST) to claim fiscal rights based on a significant digital presence, especially for services, and consequently Pakistan proposed to impose taxes both the goods and services provided digitally.
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The Permanent Committee had also been reported that the digital announcement of foreign suppliers, that is, Temu in the Pakistani market by platforms such as Google would be taxed in consistency with Pakistani tax rights.
According to the new law, payment intermediaries, including banks and financial institutions, had to raise taxes on digital payments made to foreign suppliers who supply assets or services to Pakistan. They are also obliged to inform the income collected from international electronic commerce suppliers.
The express trustee On Julio 19 he informed that Pakistan had assured Google based in the United States that he will be exempt from a new digital tax of 5% and that parts of the company’s income will be taxed even two thirds of reduced rates.
The Government had promulgated the digital presence law in June to improve the tax collection of offshore companies that had a significant digital presence but were not paying taxes on their profits.
This month, the tax authorities assured the company that “Google is not the objective of the Digital Presence Tax Law” and the legislation has been designed to cover specific cases of significant digital presence where there is no physical or registered commercial presence in Pakistan.
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Google has an important commercial presence in Pakistan and provides services for online advertising, search engines, cloud computing, communication and entertainment. He is also the largest taxpayer taxpayer for digital services.
Companies such as Meta, Amazon, Microsoft and Netflix will also be the beneficiaries of tax exemption. The promulgation of the digital presence law had created waves in Pakistan, particularly among YouTube users.
The Government Had Introduced the digital witness Proceeds Law to Tax Digitally DeliveRed Services Provide The Internet or Electronic Networks, WHERE THE DELIVERY IS AUTOMATED AND REQUISED MINIMAL OR NO Through online Interpersonal Interaction IE, 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 installation.
