The Federal Board of Revenue (FBR) has informed Google that it will not be affected by Pakistan’s newly introduced 5% digital tax. This confirmation was given during a meeting between FBR officials and Kyle Gardner, Google’s representative for South Asia.
The 5% tax, introduced under the Digital Presence Proceeds Act 2025, is aimed at taxing global tech firms that operate digitally in Pakistan without having a local office. However, the FBR clarified that since Google has a registered branch in the country, the law does not apply to it.
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Google is one of the biggest contributors to Pakistan’s digital tax revenue through its services like online ads, cloud, and search tools. In comparison, other global companies like Meta, Netflix, and Amazon contribute far less to the over Rs. 1 billion collected annually.
The FBR also explained that if any part of Google’s services is managed from outside Pakistan, the tax will be limited to 5%—not the earlier 15% rate under Section 152 of the Income Tax Ordinance.
To encourage further investment, the government has offered Google a complete income tax exemption if it shifts its branch to a Special Technology Zone, where tax holidays are valid until 2035.
The exemption has sparked debate over the effectiveness of the new law.
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