ISLAMABAD: The government has exempted the 5 per cent tax on digitally imported goods and services as part of a tariff-related agreement with the United States, signalling efforts to maintain favourable trade ties and attract foreign digital businesses.

According to a senior tax official, the exemption applies to all taxable digital supplies made by foreign entities. The legal provision itself remains intact under existing law. The Federal Board of Revenue (FBR) notified the exemption through SRO1366 of 2025, with retrospective effect from July 1, 2025.

The 5pc tax had been introduced in the FY25 budget, sparking concerns from foreign governments — particularly the United States — about its impact on cross-border........

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