FBR plans to tax ride-hailing apps in federal capital

Federal Board of Revenue (FBR) Pakistan may slap a 5% sales tax on ride-hailing services such as InDrive, Careem, and Uber operating in Islamabad as part of its upcoming federal budget, ending a years-long exemption for digital cab aggregators in the capital, people familiar with the matter said.

FBR is drafting a proposal to tax services in the Islamabad Capital Territory (ICT), aligning federal policy with the provinces, where similar services are already subject to a 5% tax by their respective revenue authorities, the people said, asking not to be named as the discussions are private.

The move—expected in the 2025-26 fiscal budget—follows an aborted attempt in last year’s budget cycle, when the FBR withdrew a similar clause from the finance bill at the eleventh hour amid policy resistance and lobbying by industry players.

Ride-hailing services have become deeply embedded in Pakistan’s urban transport ecosystem. InDrive currently leads the market with a 60% share, outpacing rivals including Careem (a unit of Uber), Bykea, SWVL, Jugnoo, and B4U Cabs, according to industry insiders.

If implemented, the new tax could raise costs for riders in Islamabad and potentially set a precedent for more stringent federal oversight of the digital services sector—an area long dominated by provincial tax regimes.