Pakistan Proposes 18% Sales Tax on Online Shopping Amid Growing E-commerce Sector

Strategic Insights -

The Pakistan government has introduced a proposal to impose an 18% sales tax on online shopping as part of its fiscal year 2025-26 budget. Federal Finance Minister Muhammad Aurangzeb emphasized in his budget speech that the rapid growth of online businesses and digital marketplaces has created challenges for traditional businesses that comply with tax laws. To address this, the government plans to make courier and logistics service providers collect sales tax at the rate of 18% from e-commerce platforms, which will then be submitted to the Federal Board of Revenue (FBR). If approved, online buyers will have to pay the tax from July 2025.

Key Takeaways:

  • The Pakistan government has proposed an 18% sales tax on online shopping as part of its fiscal year 2025-26 budget.
  • The sales tax will be collected by courier and logistics service providers from e-commerce platforms and submitted to the Federal Board of Revenue (FBR).
  • The new tax regime aims to establish a fair competitive environment and ensure full compliance with tax regulations.
  • Online buyers will have to pay the 18% tax from July 2025, and individuals conducting business through e-commerce will be required to submit their monthly transaction data and tax reports.
  • The tax rate on interest income will be increased by 5%, from 15% to 20%, applying only to passively earned income.
  • A 25% tax will be proposed on income earned through debt-based instruments, while no changes have been made to the tax rate on dividends earned from shares.

Statistics:

  • 18%: The proposed sales tax rate on online shopping.
  • 15% to 20%: The proposed increase in tax rate on interest income.
  • 25%: The proposed tax rate on income earned through debt-based instruments.
  • 2025: The taxation will commence from July.

Sources:

  • [The Express Tribune](https://tribune.com.pk/story/2430953/govt-proposes-18-speech-on-sales-tax-on-online-shopping/ "The Express Tribune")
  • [Dawn](https://dawn.com/news/1731421/government-proposes-18-sales-tax-on-online-shopping "Dawn")