FBR plans higher taxes on e-commerce (online buying and selling) during the next fiscal year budget. According to sources, the FBR (Federal Board of Revenue) will propose these proposals to the IMF (International Monetary Fund) team, starting negotiations tomorrow to finalize the budget of 2025-26.
The FBR (Federal Board of Revenue) has suggested an increase of 0.25% in withholding tax on online platforms like OLX, PakWheel, Daraz and Zameen for fiscal year 2025-26. This increase is aimed at speeding up the tax collection and meeting the demand of the IMF (International Monetary Fund) for a wider tax base. These changes are part of wider fiscal revisions and are expected to be presented to PM Shehbaz Sharif on 15th May 2025, followed by the release of the budget on 2nd June 2025.
Moreover, the FBR has also suggested a phase of withdrawal of 10% on large corporations to boost investor confidence. The tax has pushed effective corporate rates as high as 39% in large sectors such as banking, oil, cement and tobacco. Officials of FBR also believe reversing a levy tax could produce over PKR 200 billion that is currently stuck in legal disputes.
The government also intends to raise the monthly tax-free income threshold from PKR 50,000 to PKR 80,000 for the salaried class. It effectively exempts yearly income over PKR 960,000. A separate 10% surcharge on high-income individuals earning over PKR 10 million per month may also be eliminated.
Furthermore, the relief package comes with a controversial proposal to impose a 5% income tax on pensioners, analyzing the tax relief for manufacturers and the real estate sector. It will include the removal of withholding taxes on imports of raw materials and a reduction in taxes on property transactions. Additionally, imported vehicles may also get duty relief but local cars over 1300 CC could face higher taxes.
However, despite these proposed measures, the real challenge is to achieve a revenue target of PKR 12.3 trillion. Officials realize that aggressive reforms are needed to reach the goal. The IMF (International Monetary Fund) discussions are expected to focus on digital compliance, sustainable revenue generation and, most importantly, fiscal consolidations.
