ISLAMABAD, June 6, 2025 – The Federal Board of Revenue (FBR) is actively exploring the imposition of General Sales Tax (GST) on cross-border online sales as part of the upcoming budget for 2025–26.
The move aims to plug loopholes in the existing tax framework and expand the tax base in Pakistan’s rapidly growing digital economy.
According to FBR officials, proposals have been received regarding taxation of international e-commerce platforms facilitating sales in Pakistan. The FBR is reviewing these recommendations to introduce a more equitable and transparent framework for digital transactions.
The Institute of Cost and Management Accountants of Pakistan (ICMAP), in its budget proposals, has recommended that the government apply VAT or GST on cross-border online sales. This step would help the FBR address revenue leakages and remove disparities between domestic and international sellers. Global platforms such as Amazon, AliExpress, and other e-commerce giants often conduct transactions in Pakistan without remitting any local taxes.
“By taxing international e-commerce transactions, Pakistan asserts control over its economic space, recovering revenue that would otherwise benefit foreign jurisdictions,” ICMAP stated. They further noted that this would allow the FBR to access previously untapped revenue streams and reduce leakage from the digital economy.
ICMAP believes that implementing GST on cross-border sales would also level the playing field for local businesses, encouraging innovation and fair competition.
Meanwhile, the Institute of Chartered Accountants of Pakistan (ICAP) has also emphasized the importance of taxing digital services related to e-commerce and e-business. ICAP pointed out that many such services are provided through platforms either located outside Pakistan or in different provinces, creating jurisdictional confusion over taxation authority.
To address this, ICAP proposed that all provincial revenue authorities coordinate with the FBR to introduce a unified mechanism. Key recommendations include:
• Capturing services through platforms located within or outside Pakistan via banks and financial institutions;
• Establishing a fair revenue-sharing formula among provinces;
• Allowing a single return to be filed by service providers, aligned with the FBR’s new sales tax return system.
Without such cooperation, cross-border and domestic digital services may remain untaxed due to jurisdictional ambiguity.
As Pakistan’s e-commerce ecosystem expands, the imposition of GST on cross-border transactions could offer a comprehensive solution to revenue loss while creating a cohesive tax framework across federal and provincial lines. The FBR is expected to finalize its decision as part of the 2025–26 budget planning.