KCCI proposes sales tax exemption to e-commerce

KCCI proposes sales tax exemption to e-commerce

Karachi Chamber of Commerce and Industry (KCCI) has proposed sales tax exemption to e-commerce retailers to promote online business transactions in the country.

The KCCI in its proposals for budget 2022/2023 submitted to the Federal Board of Revenue (FBR) said that through Clause 3(1)(c) a new Clause (18A) under Section 2 whereby a definition of Online Market place has been inserted which brings the entire Online shopping and E-Commerce sector within the scope of 17 per cent Sales Tax and other levies.

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The chamber said that a large number of educated youth and start-ups have found productive employment through E-Commerce and Online Sales in Pakistan.

By imposing high rate of Sales Tax at 17 per cent plus other taxes by new provision will cap the potential of E-Commerce and result in failure of many new entrepreneurs.

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The KCCI proposed online retailers having turnover less than Rs50 million should be exempt from sales tax to support the MSMEs, startups and women entrepreneurs conducting retail sales other than established brand products who are already in normal sales tax regime.

Giving rationale, the KCCI said that it will promote E-Commerce which has far more potential to increase the volume of online sales.

E-Commerce and start-ups have the capacity to employ educated youth, women entrepreneurs and contribute to GDP growth.

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Earlier, the chamber proposed that the withholding income tax at import stage on raw materials should be adjustable against actual liability.

The concept of minimum withholding tax on import of raw materials may be phased out.

Further, distinction should be made between importers of finished goods and raw materials who mainly cater to the industry and are fully documented.

Giving rationale to the proposals, the KCCI said commercial importers who are a major source of revenue will be able to resume their business and contribute to revenue as well as promotion of SMEs.

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