By Zainab Shafiq 
In a bold shift to formalize Pakistan’s rapidly growing online economy, the government has unveiled strict taxation measures in the federal budget 2025-26. Announced by Finance Minister Muhammad Aurangzeb, the new policies aim to bring e-commerce sellers, freelancers, and digital content creators into the formal tax structure, starting July 1, pending parliamentary approval. The centerpiece of this effort is an 18% sales tax on goods and services sold through platforms like Daraz and Foodpanda.
This move marks a significant evolution in how the government views digital entrepreneurship. By targeting digital transactions directly, the federal budget 2025-26 sets the stage for more structured revenue collection from previously untapped sectors.
Digital Platforms Face New Compliance Rules Under Federal Budget 2025-26
Under the new system, all online sellers must register for income and sales tax. Platforms that host or deliver for unregistered sellers, including e-commerce websites and courier services, will face penalties of up to Rs1 million.
A newly introduced Section 6A will tax all digital payments for goods or services delivered within Pakistan, making any transaction over apps, websites, or even mobile orders a taxable event.
Freelancers and Influencers in the Crosshairs
For the first time, digital workers like YouTubers, TikTok creators, graphic designers, consultants, and remote educators will see a 3.5% income tax on local earnings. The government expects this move to generate Rs52.5 billion in revenue. However, income from overseas clients and exports remains exempt under current laws.
The policy signals a clear intent: no matter the size of your digital footprint, if you earn locally online, you’re now accountable under the federal budget 2025-26 framework.
Concerns from Pakistan’s Freelance Community
Industry voices like the Pakistan Freelancers Association (PAFLA) warn the blanket approach could stifle innovation and hurt small earners. PAFLA urges a tiered tax system that exempts low-income digital workers and focuses on high-earning influencers.
What Counts as Taxable Digital Activity?
If you provide any of the following services online, you’re now part of the tax net:
- Streaming or digital subscriptions
- Online education and e-health
- Software, SaaS, and cloud tools
- Freelance and gig economy services
- Selling via websites, apps, or mobile platforms