Unregistered sellers: FBR bars OMPs, courier services to offer their services
ISLAMABAD: The Federal Board of Revenue (FBR) has barred online market places (OMPs) and courier services to offer their services to any unregistered seller under the new Tax Regime for E-commerce from July 1, 2025.
In a recent income tax circular, the FBR has explained that every seller has been required under the law to get itself registered in income tax and online market place (OMP) and courier service are also now barred to offer their services to any unregistered sellers. The OMPs are obligated to file statements about the vendors using their platforms.
The FBR stated that the changing dynamics of retail market in Pakistan along with the fact that a large number of population of sellers connected with on-line marketplace or working through their e-stores are not registered and operate informally encouraged to design a framework to register these sellers, assign them National Tax Numbers through a simplified process and to ensure that a contribution to tax on every digitally ordered transaction is collected through placing a workable withholding tax regime.
For taxing domestic e-commerce transactions, a charging section 6A has been introduced which stipulate that every payment received for digitally ordered goods or services using an online market place (OMP) or website shall be charged to tax.
Corresponding changes for ensuring upfront withholding tax collection has been introduced in section 153(2A) whereby payment intermediary (banking company, financial institution, licensed dealer of foreign exchange and payment gateways) and courier involved in Cash on Delivery (CoD) are made responsible to collect one percent withholding tax and 2 percent on gross amount of receipts respectively at the time of remitting payment to the seller.
The FBR has clarified that the differential in tax rate between these withholdings is for encouraging the use of digital means for payment to meet overall national objective of transforming to cashless economy.
The tax collected under the scheme is a final tax under section 6A on the income derived by the seller from local e-commerce transactions and the export transactions.
However, withholding under section 154 and 154A will fall outside the ambit of taxation under this regime. For the purpose of clarity, the terms relevant to this scheme such as e-commerce, digitally delivered services, online marketplace, and payment intermediary and courier service have been incorporated in the Income Tax Ordinance.
The FBR further explained that payment intermediary and courier have to collect tax in the name of each seller, deposit it in the treasury on the monthly basis beside filing the prescribed WHT statement in this regard. The payment intermediary and courier service are required to file a prescribed withholding statement containing information of all transactions of every seller making sales through OMP and or e-stores.
The FBR cautioned that penalties have been prescribed if compliance is not made with respect to filing of statutory statements. Penalties on online marketplace and courier service have also been placed in case of default to withhold tax or to comply with registration requirement of the seller.
Regarding the responsibility of collecting tax under this section, it is clarified that in the case of vendors being e-stores and similar mobile applications where payment is made online, the acquiring bank will be the payment intermediary for the purpose of this provision and shall be responsible to collect tax.
On the other hand, in the case of vendors being e-stores and similar mobile applications where payment is made on Cash on Delivery (CoD) basis, the courier which could be an aggregator, providing service to the e-store or mobile application of delivering goods and collecting cash at the doorstep of the buyer shall be responsible to comply with all the statutory obligations in this regard.
Further, in case a vendor sells goods through Online Market Place (OMP) and payment is made online, the bank or financial institution of OMP in the second and final arm of transaction settling the payment between vendor and buyer shall be the payment intermediary for the purpose of the collection of tax. It may be noted that the issuing and acquiring banks in the first arm of transaction could not be the payment intermediaries as they are involved in settling transaction between the buyer and OMP, which is acting as an agent for the vendor/seller and not a seller in real sense.
On the other hand, in case a vendor sells goods through OMP or otherwise and payment is made on Cash on Delivery (CoD) basis, the courier, which could be an OMP in case vendor is using its services; or the aggregator who indirectly provides such services to e-store; or the courier directly providing those services to the e-store or mobile application of delivering goods and collecting cash at the doorstep of the buyer shall be responsible to comply with all the statutory obligations in this regard, FBR added.
Copyright Business Recorder, 2025
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