His Excellency Muhammad Aurangzeb
Minister for Finance and Revenue
Ministry for Finance
Q-Block, Pakistan Secretariat
Islamabad, Pakistan
Dear Minister Aurangzeb:
As the leading voice for U.S. businesses with significant investments in Pakistan, the U.S. Chamber of Commerce’s U.S.-Pakistan Business Council (USPBC) has deep concerns with Pakistan’s introduction of a discriminatory new tax on the gross revenue of foreign vendors deemed to have “significant digital presence” in Pakistan. The tax was proposed in the Digital Presence Proceeds Tax Act, 2025 (Act), which was included in Pakistan’s Federal Budget for fiscal year 2025–2026. We are concerned about the Act’s conflicts with international tax norms and the risk that it will discourage foreign investment in Pakistan.
The Digital Presence Proceeds Tax Act, 2025, would levy a 5% “digital presence proceeds tax” on the gross proceeds from foreign vendors’ transactions with Pakistani users. So structured, the proposed tax would be similar to digital services taxes (DSTs) in France and the United Kingdom, which the United States Trade Representative has found to be discriminatory against U.S. companies, inconsistent with established principles of international taxing jurisdiction, and burdensome on U.S. commerce. Recent experience demonstrates that such taxes are most likely to be borne by Pakistani consumers, who will face higher costs for goods and services. Furthermore, imposing such a tax could stifle expansion and job creation among local Pakistani companies that rely on digital tools supplied by foreign companies.
The USPBC remains committed to working with the Government of Pakistan on policies that support economic growth and job creation in Pakistan. To maintain the certainty and stability necessary to support continued business investment in Pakistan, we respectfully urge policymakers to withdraw the Digital Presence Proceeds Tax Act, 2025. The Act would not only disproportionately harm U.S. companies and American digital exports but also undermine the robust U.S.–Pakistan trading relationship at a critical juncture.
As Pakistan continues to grow its digital economy, transparency and predictability in the legislative process will be critical to ensuring that foreign companies can continue to provide services and invest in Pakistan. To this end, we respectfully emphasize the need for a robust public-private dialogue to help achieve Pakistan’s goals, promote domestic economic growth and innovation, and address potential trade irritants in the U.S.–Pakistan bilateral commercial relationship.
Sincerely,
Esperanza G. Jelalian
President, U.S.-Pakistan Business Council
U.S. Chamber of Commerce
