As Pakistan begins preparations for Budget 2026-27, the Institute of Cost and Management Accountants of Pakistan has put forward a series of proposals aimed at bringing previously untaxed or under-documented sectors into the formal tax system. Among the most notable suggestions are the introduction of a digital services tax, the regulation and taxation of online gaming, and a levy on corporate advertising expenditure, all of which reflect a broader push to diversify the country’s revenue base rather than continuing to concentrate the tax burden on already-documented segments of the economy.
The proposed digital services tax would apply to streaming platforms, mobile applications, online media services, and gaming. The Institute of Cost and Management Accountants of Pakistan has argued that as digital consumption in Pakistan continues to grow at a rapid pace, the sector is well-positioned to contribute more meaningfully to the national economy while simultaneously becoming better organised and regulated. On online gaming specifically, much of which currently operates through foreign platforms and remains entirely undocumented, the institute has recommended a formal licensing framework under which only approved operators would be permitted to function within the country. Alongside this licensing system, a two percent tax on operator earnings has been proposed, with the dual objective of generating government revenue and providing users with a more structured and protected environment in which to engage with these services.
The institute has further recommended introducing a tax on corporate advertising and brand promotion activities for companies that earn more than one hundred million rupees annually. The proposal is designed to be relatively straightforward to implement, as it can draw on existing records maintained by advertising agencies, thereby keeping administrative complexity to a minimum while improving transparency across the sector. These three proposals sit within a wider package of recommendations from the institute that also spans climate-related taxes, transport, financial services, agriculture, and luxury goods, collectively representing an effort to construct a more balanced and equitable tax system by drawing in sectors that have largely remained outside the formal net.
It remains to be seen which of these proposals the government will choose to incorporate into the final budget, and the outcome will depend on negotiations between policymakers, industry representatives, and tax authorities in the weeks ahead. Nevertheless, the Institute of Cost and Management Accountants of Pakistan’s recommendations signal a clear directional shift in thinking around fiscal policy, one that increasingly looks toward the digital economy and high-earning corporate entities as the next frontier for broadening Pakistan’s persistently narrow tax base.
Follow the SPIN IDG WhatsApp Channel for updates across the Smart Pakistan Insights Network covering all of Pakistan’s technology ecosystem.
