E-Commerce sector urges govt to revise proposed tax steps

KARACHI: Pakistan’s E-Commerce ecosystem has urged the federal government to revise proposed tax and compliance measures announced in Finance Bill 2025-26 and initiate a structured dialogue with stakeholders to co-create practical, growth-friendly tax policies

Addressing a press conference here on Friday at Karachi Press Club (KPC), representatives of the Chainstore Association of Pakistan (CAP) and the Pakistan E-Commerce Association (PEA), along with other stakeholders including freelancers, marketplaces, courier services, payment providers, and digital platforms, have urged the government to adopt practical revisions to the proposed tax and compliance measures in the Finance Bill 2025-26.

On the occasion, representatives including Muhammad Zeeshan, Shoaib Bhatti, Joint Secretary CAP Bushra, Atta Bin Azad, Mahwish from Payfast, Shoaib Ahmed and others were also present.

They informed that Pakistan’s e-commerce sector has grown over 35 percent annually in the past five years and currently, over 100,000 micro and small online sellers are active, supporting incomes for more than a million people nationwide. The total market size is estimated at Rs 2.2 trillion or $7.7 billion with some 2 percent share in the national GDP.

They said that all stakeholders is supporting fair taxation and documentation, but the proposed measures risk severely disrupting both established and small businesses by putting an extreme compliance burden all at once. “Their design and immediate implementation will stifle digital entrepreneurship, especially among youth and women,” they added.

The coalition appreciates the proposed 5 percent digital presence levy on offshore platforms like Temu and supports improved data reporting requirements of the sector. However, the gains should not be undermined by excessive and impractical tax compliance obligations.

They said that Finance Bill introduces multiple taxes and complex procedures across all related businesses, with no stakeholder consultation or phased rollout. Industry leaders warn that this top-down approach mirrors the unsuccessful “Tajir Dost” scheme, which failed due to impractical design and lack of consultation.

“Blanket 2 percent sales tax withholding, mandatory sales tax registration for all online merchants, complex income tax withholding at six different rates, penalties of up to Rs 500,000 per case on platforms, couriers, and sellers and enforcement from 1st July with no transition period are key concern,” highlighted the representatives.

They recommended 2 percent sales tax withholding to non-ATL (unregistered) sellers and income tax registration for small/ home-based sellers instead of complicated sales tax registration and monthly filings.

Industry leaders urged the Prime Minister, Finance Minister, Commerce Minister, and Federal Board of Revenue (FBR) to pause enforcements and initiate a structured dialogue with stakeholders to co-create practical, growth-friendly tax policies.

Copyright Business Recorder, 2025