Pakistan’s Finance Bill 2025-26, announced on June 10, 2025, introduces sweeping taxes on e-commerce and digital services, raising costs for online shoppers and targeting foreign vendors. Presented by Finance Minister Muhammad Aurangzeb, the bill aims to boost revenue but may impact consumers and businesses. This article explores the new tax measures, their enforcement, and their implications.
The bill amends the Income Tax Ordinance, 2001, defining e-commerce as selling or purchasing goods and services via websites, mobile apps, or online marketplaces. Local e-commerce platforms must collect taxes on every transaction, while foreign platforms like AliExpress, Temu, and Amazon face new levies under the Digital Presence Proceeds Tax Act, 2025.
- Local platforms: A Tax on all purchases within Pakistan.
- Foreign vendors: 5% tax on goods sold to Pakistani customers, collected by banks or payment gateways.
Customs will ensure tax compliance by requiring courier companies to verify tax payments before delivering foreign goods.
Digital Payment Taxes
The bill imposes taxes on digital payments, varying by transaction size:
- 1% on payments up to Rs 10,000.
- 2% on payments between Rs 10,000 and Rs 20,000.
- 0.25% on payments over Rs 20,000.
For cash-on-delivery payments, courier services will collect:
- 0.25% for electronic items.
- 2% for clothing.
- 1% for other items.
Payment gateways and couriers, including logistics, ride-hailing, and food delivery services, will enforce these taxes.
Social Media Advertising Tax
Foreign vendors paying for social media ads in Pakistan on platforms like TikTok, YouTube, Instagram, Facebook, and Twitter will face a 5% tax on ad spending. Payment intermediaries and platforms must file quarterly tax statements, with non-compliance penalties of Rs1 million per quarter.
The bill tightens rules for online vendors, requiring registration under the Sales Tax Act, 1990, to sell on e-commerce platforms or use courier services. Unregistered vendors will be barred from online sales, ensuring tax compliance.
The new taxes will likely increase online shopping costs, potentially reducing consumer spending. Small businesses and freelancers on digital platforms may face higher compliance burdens. However, the government expects these measures to enhance revenue collection, supporting fiscal goals outlined in the Finance Bill.
Pakistan’s Finance Bill 2025-26, unveiled on June 10, 2025, targets e-commerce and digital services with new taxes, impacting shoppers, vendors, and platforms. While aimed at boosting revenue, these measures may raise costs and compliance challenges. As debates continue in the National Assembly, the bill’s economic effects are under scrutiny.
