ISLAMABAD: The federal government is exploring new ways to bring the fast-growing e-commerce sector under the tax net as part of its 2025–26 federal budget strategy. With online shopping becoming a staple for middle and upper-income consumers in major urban areas, officials see the digital retail space as a key source of untapped revenue.
The Federal Board of Revenue (FBR) is weighing several proposals to increase tax collection from online transactions. One option under consideration involves applying general sales tax (GST) to e-commerce, with a provision for delivery agents to deduct 3% from the customer at the point of cash delivery. This portion would be remitted directly to the national treasury. The remaining 15% GST could be embedded in the product cost and collected by manufacturers.
Virtual negotiations between Pakistan and the International Monetary Fund (IMF) are set to begin today (Wednesday) to finalize the upcoming budget. These talks will focus on narrowing the fiscal deficit to meet the IMF’s target of 5.1% of GDP for the next fiscal year through increased taxation and spending cuts.
Efforts to integrate millions of traditional retailers into the tax framework have repeatedly fallen short, with the current government’s Tajir Dost Scheme failing to attract significant participation. As a result, attention has now shifted toward the booming online retail market as a potential source of tax revenue.
The FBR is also considering expanding the tax base by targeting purchases made via debit and credit cards. While federal excise duty (FED) is currently charged on international card transactions, local purchases remain exempt.
An internal FBR study has revealed substantial potential for revenue generation from the growing popularity of e-commerce in urban areas. “We are evaluating options to bring online shopping into the tax net starting next budget,” an official said. “Various proposals will be discussed with the IMF during the upcoming budget talks.”
Proposed changes may include mandatory tax collection and remittance responsibilities for all e-commerce platforms, including those operating as third-party marketplaces.
However, tax professionals have expressed concerns, warning that such measures could stifle the growth of the still-developing e-commerce industry in Pakistan.
