budget proposals

Framing sales tax rules for e-commerce recommended

Budget 2021-2022, Taxation

KARACHI: Tax practitioners have suggested the Federal Board of Revenue (FBR) for framing rules to bring e-commerce under sales tax laws.

The tax practitioners under the umbrella of Karachi Tax Bar Association (KTBA) discussed upcoming budget 2021/2022 and proposed a comprehensive rules for e-commerce under sales tax laws.

It is discussed that e-commerce of goods as well as services has gained significant momentum particularly in post COVID era. Through digital platforms, large number of vendors/service providers from informal economy can reach customers without setting up proper business structure.

It is difficult not only for the tax authorities to capture such activity but also for the compliant taxpayers who want to discharge their obligations under the tax laws.

Therefore, it is suggested that relevant provisions be amended, and detailed rules be framed for ecommerce in line with global best practices core features of which are:

— Digital platforms, due to their control on the transactions, should be held responsible for collection and payment of sales tax where the vendor is unregistered

— Small vendors earning revenue below 5 Million be exempted from getting registration under the Act

— Appropriate provision for exemption from withholding tax should also be introduced

Leave a Reply