The federal government plans to impose a capital gains tax on cryptocurrency transactions as part of the upcoming budget 2026-27, informed sources confirmed.
The government, in consultation with IMF, has finalised plans to expand Section 37 of the Income Tax Ordinance 2001, bringing cryptocurrency trading gains into the tax framework for the first time.
The proposed tax rate is expected to range between 20 and 30 percent, though authorities have not yet announced a final decision on the precise applicable rate.
A high-level government committee has developed recommendations covering both the taxation and documentation of cryptocurrency transactions, including mechanisms to identify unregistered market participants.
According to the Federal Tax Ombudsman’s report to the Federal Board of Revenue, approximately 560 million cryptocurrency users exist worldwide, with an estimated nine million based in Pakistan.
The report noted that Pakistan ranks among the world’s leading countries in cryptocurrency adoption, with substantial commercial activity currently occurring outside the existing tax framework.
The Federal Tax Ombudsman observed that significant undocumented and untaxed cryptocurrency transactions are taking place, highlighting the absence of any formal regulatory or taxation mechanism.
Pakistan maintained a cautious position on cryptocurrency since 2018, when the SBP moved against banks facilitating virtual currency activity, effectively pushing formal finance away from users.
In April 2026, the central bank permitted banks to open accounts for licensed Virtual Asset Service Providers following the enactment of the Virtual Assets Act 2026, marking a significant policy shift.
Under the new framework, banks are required to verify licences issued by the Pakistan Virtual Assets Regulatory Authority and maintain segregated client accounts denominated in rupees.
Tax experts suggest that amendments to the Income Tax Ordinance 2001 should formally classify crypto assets as specified financial instruments, establishing clear rules for calculating taxable gains and losses.
Under proposals being discussed, gains on cryptocurrency disposals would be taxed on a realised basis using the First-In, First-Out valuation method, with rates potentially varying by asset holding period.
Peer-to-peer trading presents a particularly complex enforcement challenge, as such transactions leave no broker confirmation, settlement note, or declared transaction value visible to tax authorities.
The Ministry of Finance tax policy unit confirmed the matter remains under active consideration and is being examined in consultation with industry experts and other relevant stakeholders.
