Islamabad, May 26, 2024 – The Federal Board of Revenue (FBR) is considering a new measure that would require online retailers to deposit sales tax, according to sources within the FBR.
This proposal is part of the tax authority’s suggestions for the upcoming Budget 2024-25.
FBR officials have recommended amending sub-section (3) of section 3 of the Sales Tax Act, 1990. The proposed amendment aims to make it mandatory for online retailers, even those who do not own the goods they sell, to collect and deposit sales tax on behalf of the government. This change specifically targets platforms like Daraz.pk, which would be responsible for collecting sales tax from their customers and ensuring its timely deposit into the national exchequer.
“By amending the Sales Tax Act, we aim to bring more transparency and compliance into the e-commerce sector,” an FBR source stated. “This will ensure that the sales tax collected by online retailers is properly accounted for and deposited, reducing revenue leakage and enhancing government funds.”
The amendment would involve adding a proviso to sub-clause (a) of sub-section (3) of section 3, clearly defining the responsibility of online retailers in the collection and deposition of sales tax. This initiative reflects the FBR’s ongoing efforts to streamline tax collection processes and integrate the rapidly growing e-commerce sector into the formal economy.
Online retail platforms have seen exponential growth in Pakistan over recent years, driven by increased internet penetration and changing consumer habits. However, the regulatory framework has struggled to keep pace, leading to potential gaps in tax collection. The proposed amendment is seen as a crucial step in addressing these gaps and ensuring a level playing field for all retailers.
If implemented, the new rule would require platforms like Daraz.pk to adjust their business practices to comply with the enhanced regulatory requirements. This move is expected to improve tax compliance among online retailers and contribute significantly to the national revenue.
The FBR’s focus on e-commerce comes as part of broader efforts to expand the tax base and improve tax administration. By bringing online sales under more stringent tax regulations, the FBR aims to enhance revenue generation and support Pakistan’s economic stability.
The proposal is still under consideration, and its inclusion in the final budget will depend on further discussions and approvals within the government. However, if approved, it will mark a significant shift in the way online retail operations are taxed in Pakistan.
