Online market places to collect 2% withholding sales tax

Online market places to collect 2% withholding sales tax

ISLAMABAD: The online market places have been brought into the tax net as through the Finance Act, 2021 the owner of online market place has been made withholding agent and made responsible for collecting withholding tax at two per cent on sales made through digital platform.

A new definition has been including in the Sales Tax Act, 1990 through the Finance Act, 2021, which stated: online market place  includes an electronic interface such as a market place, e-commerce platform, portal or similar means which facilitate sale of goods, including third party sale, in any of the following manner, namely:—

(a) by controlling the terms and conditions of the sale;

(b) authorizing the charge to the customers in respect of the payment for the supply; or

(c) ordering or delivering the goods.

In the Eleventh Schedule of the Sales Tax Act, 1990, the owner of online market place shall collect two per cent of gross value of supplies from persons other than active taxpayers.

However, the law explained that the provision of this entry would be effective from the date as notified by the FBR.

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