In a significant policy reversal, the federal government of Pakistan has withdrawn the 5% Digital Presence Proceeds Tax previously imposed on foreign e-commerce platforms such as Temu, SHEIN, and AliExpress. This move is expected to bring modest relief to consumers, who saw sharp price hikes on digitally ordered goods following the 2025–26 fiscal budget.

Impact on Prices
Products sold through these online marketplaces had become more expensive after the tax was implemented. With the government’s latest decision, prices are anticipated to come down—though not to pre-budget levels, due to the continued imposition of an 18% sales tax.

FBR Notification
According to a notification issued by the Federal Board of Revenue (FBR):

“In exercise of the powers conferred by section 15 of the Digital Presence Proceeds Tax Act, 2025, the federal government is pleased to direct that the Digital Presence Proceeds Tax shall not apply to digitally ordered goods and services supplied from outside Pakistan, by any person, which are chargeable to tax under the said Act.”

Strategic Considerations
Sources indicate that the move was part of broader efforts to enhance bilateral trade with the United States. The rollback will benefit a wider range of foreign online platforms beyond the well-known names of Temu, SHEIN, and AliExpress.

Effective Date
The tax exemption officially took effect on July 1, 2025, aligning with the implementation of the new fiscal year policies.

Additional Context
Earlier, digital imports faced a dual taxation impact: the now-removed 5% tax and a still-enforced 18% sales tax. As a result, while the latest development eases the burden slightly, substantial cost reductions for consumers are still constrained.