ISLAMABAD (Kashmir English): The government has introduced new regulations in the Finance Bill to only allow vendors registered under the Sales Tax Act to sell goods online.
A tax has also been proposed on social media advertising in Pakistan by foreign e-commerce platforms.
The Finance Bill also proposes new taxes on local and foreign e-commerce marketplaces, making online shopping costlier for Pakistani customers.
The money bill has proposed amendments to the Income Tax Ordinance, 2001 to add the definitions of e-commerce platforms and “digitally delivered services”.
The proposed amendments define e-commerce as the “sale or purchase of goods and services” through “websites, mobile applications or online marketplaces”.
In a consequential move, the government looks to tax foreign companies for selling goods, running ads in Pakistan.
The digitally delivered services would include music, audio and video streaming services, telemedicine, e-learning, cloud services, online software applications, and online banking etc.
Under the proposed regulations, local e-commerce companies will have to pay a tax on every purchase made from their platforms within Pakistan.
For digital payments, a tax rate of 1pc will be charged on payments not more than Rs10,000.
For payments between Rs10,000 and Rs20,000, the tax would be 2pc of the gross amount and 0.25pc for over Rs20,000.
If a customer pays for electronic items through cash-on-delivery payments, they will be charged 0.25pc of the gross amount as tax.
The rate would be 1pc for every item other than clothing which would be 2pc.
The tax on digital payments will be charged by payment gateways when processing the transactions.
In case of cash on delivery, courier services will collect the amount, inclusive of tax, from customers.
As per the law, courier services would include logistics companies, ride-hailing and food delivery platforms and delivery services provided by e-commerce platforms.
New rules for sellers
The Finance Bill has also proposed stricter regulations for online vendors to bring them into the tax net.
“Every online marketplace or courier service … shall not allow any vendor to use its platform services to carry out e-commerce transactions unless such vendors have been registered under the Sales Tax Act, 1990 (VII of 1990) and this Ordinance.”
The provision essentially means that shopkeepers registered under the Sales Tax Act only will be allowed to sell their goods on online stores.
Foreign vendors
The government has also intended to tax goods purchased online from outside Pakistan.
The new measures included the promulgation of a new law titled the Digital Presence Proceeds Tax Act, 2025.
It aims to bring online marketplaces into tax net that sell to Pakistani customers but have little to no physical presence in the country.
Under section 3 of the proposed law, every foreign vendor with a “significant digital presence in Pakistan” will be charged a tax on goods sold online from outside Pakistan.
Typically, these vendors include online marketplaces such as Amazon, AliExpress, and Temu, among others.
Under the proposed law, customers would be charged 5pc of the amount paid to the vendor for the purchase of goods from a foreign marketplace.
The tax would be collected by banks, financial institutions, or payment gateways that facilitate transactions between customers and the online marketplace.
Customs have been empowered to ensure that goods purchased online from foreign marketplaces are not delivered to customers unless the courier companies provide evidence of tax payment.
