Pakistan is expanding its tax net to capture income earned by non-residents through digital means or presence in the country. The amended Finance Bill 2024 targets tech companies, dual citizens with Pakistani income sources, and foreign nationals from countries with future double taxation agreements with Pakistan.
Under the new rules, non-residents earning income in Pakistan through digital channels, such as data or software downloads, will be subject to taxation. The concept of “significant economic presence” establishes tax liability for non-residents exceeding a specific threshold of transactions or digital interactions with Pakistani users.
However, the exact thresholds for triggering taxation and the authority responsible for setting them remain unclear. The amendment aims to increase tax revenue from non-residents who benefit from Pakistan’s digital economy, but some uncertainties regarding implementation details need to be addressed.
