Pakistan plans cryptocurrency tax regime in FY27 budget

Pakistan plans to introduce specific taxation provisions for cryptocurrencies in the federal budget for fiscal year 2026-27 as the government prepares to legalise and regulate virtual asset trading, Arab News reported, citing officials familiar with the matter.

The proposed tax rate is expected to be discussed at an upcoming meeting involving Pakistan Virtual Assets Regulatory Authority, International Monetary Fund and Pakistani tax authorities.

Officials said a final decision had yet to be taken on whether taxes would apply to the overall profit earned from cryptocurrency trading or be imposed separately on individual transactions.

PVARA is seeking a lower tax rate to encourage traders and businesses to enter the regulated market, while tax authorities favour a higher rate because of revenue targets agreed under Pakistan’s IMF programme, according to an official who requested anonymity.

Pakistan is implementing economic reforms under a 37-month, $7 billion IMF programme, including measures aimed at strengthening financial oversight, transparency and regulation of emerging technologies.

Citizens are expected to be allowed to trade cryptocurrencies legally within the next few months once formal licences are issued to approved exchanges.

PVARA granted no-objection certificates to Binance and HTX in December 2025, allowing the two international cryptocurrency exchanges to proceed towards formal licensing as virtual asset service providers.

The government is seeking to bring Pakistan’s cryptocurrency market, which currently operates outside a formal legal framework, under regulatory and taxation arrangements.

Officials said PVARA had verbally asked relevant government agencies to suspend enforcement action against cryptocurrency trading during the transition to the regulated system.

An official of Federal Board of Revenue said cryptocurrency income was already taxable under existing law, even though digital assets were not separately listed in all taxation provisions.

According to the official, cryptocurrency mining income is treated as business income, while gains earned from selling virtual assets are treated as capital gains.

FBR may, however, introduce specific definitions for cryptocurrencies and references to PVARA legislation in tax laws following enactment of the regulatory framework.

The Senate passed the Virtual Assets Bill, 2026, in February, providing a legal basis for regulating and supervising Pakistan’s digital asset market and introducing investor-protection measures.

Once cryptocurrency exchanges receive formal licences, they will be required to collect information about users and their income sources through mandatory Know Your Customer procedures.

Pakistan is also positioning digital finance, artificial intelligence and information technology as part of its economic growth strategy, with cryptocurrency regulation forming part of efforts to formalise digital economic activity.