Google Gets Tax Exemption in Pakistan

Google Gets Tax Relief in Pakistan Under New Digital Tax Law

The Pakistani government has told Google it will not have to pay the new 5% digital tax under the recently passed law. In fact, Google might even pay less tax than before.

The Federal Board of Revenue (FBR) confirmed to Google that it is not the target of the Digital Presence Proceeds Tax Act 2025. This law is meant to collect tax from companies that earn money from Pakistan without having any office or legal presence in the country.

FBR sent this confirmation to Kyle Gardner, Google’s South Asia Government Affairs representative.

Why Google Is Exempt?

Google has a registered branch office in Pakistan. Because of this, the company is considered a tax resident of Pakistan. 

According to the law, if a foreign company has a branch in Pakistan, it does not have to pay the 5% digital tax. Also, digital services given from such a branch are not taxed under the new law.

Previously, Google was paying 10% tax under Section 152 of the Income Tax Ordinance, which was later raised to 15%. 

But now, thanks to the new law, Google only needs to pay 5% tax, or even get a full exemption if it moves its local office into a Special Technology Zone (STZ).

Under Clause 123EA of the Income Tax Ordinance, companies working in STZs do not have to pay income tax until 2035.

Other Tech Companies

Google is one of the largest digital tax payers in Pakistan. In contrast, companies like Meta, Amazon, Microsoft, and Netflix pay very little tax despite having big user bases in Pakistan.

The government said that no double taxation will happen. If the new 5% digital tax applies, the older tax rules won’t apply to the same transaction. This means Google won’t have to pay tax twice for the same income.

What the New Law Covers

The Digital Presence Proceeds Act 2025 is aimed at companies that:

  • Offer digital services from abroad
  • Have no office or official presence in Pakistan
  • Provide services like streaming, cloud storage, telemedicine, online classes, and more

But if a company like Google has a local office, the law does not apply.

Keep visiting the waystax news page for the latest updates related to taxation in Pakistan