ISLAMABAD: The federal government is considering imposing a 5% sales tax on ride-hailing platforms such as InDrive, Careem, and Uber in Islamabad as part of the upcoming 2025-26 budget.
This move would mark the end of a years-long tax exemption for digital cab services in the capital. The Federal Board of Revenue (FBR) is reportedly drafting a proposal to bring Islamabad Capital Territory (ICT) in line with provincial tax policies, where similar services already face a 5% levy.
The plan comes after a failed attempt in last year’s budget, when the FBR removed a similar tax clause following industry pushback and last-minute lobbying.
Ride-hailing apps have become a crucial part of Pakistan’s urban transport network, with InDrive currently dominating the market at a 60% share, ahead of competitors like Careem (owned by Uber), Bykea, SWVL, Jugnoo, and B4U Cabs.
If approved, the new tax could increase fares for passengers in Islamabad and signal stronger federal oversight of digital services—a sector traditionally regulated by provincial tax authorities.
Analysis: A Shift in Digital Taxation Policy?
The proposed 5% sales tax on ride-hailing services reflects Islamabad’s broader effort to expand revenue collection from the digital economy. By aligning federal policy with provincial tax regimes, the government may be testing the waters for more centralized regulation of tech-based services.
However, the move could face resistance from both companies and consumers. Ride-hailing platforms, already operating on thin margins, may pass the additional cost to users, potentially reducing demand. Additionally, if the federal government extends such taxation to other digital services, it could reshape Pakistan’s evolving tech landscape—balancing revenue needs against innovation and affordability concerns.
The final decision in the upcoming budget will reveal whether Islamabad is ready to enforce this change or if industry lobbying will once again delay the move.