Online market places to withhold sales tax from July 01

Online market places to withhold sales tax from July 01

ISLAMABAD: Online market places will collect sales tax on supply of goods and services through digital platforms on behalf of the Federal Board of Revenue (FBR) from July 01, 2021, sources said on Monday.

The sources said that through Finance Bill, 2021 the term online marketplace was introduced.

According to KPMG Taseer Hadi & Co. Chartered Accountants said that COVID-19 had catapulted the universe into adopting truly digital lifestyle and Pakistan has also seen drastic growth in e-Commerce.

As a way forward to clearer taxation policy in this sector, there have been many changes in Pakistani Taxation laws.

The Finance Bill proposes to insert new clause 18A to Sales Tax Act, 1990 defining the term “Online marketplace” to include 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.

Furthermore, Bill proposes to insert clause 3(1)(c) requiring the person running online market place to charge sales tax on the value of supply of goods through that online market place, whether the goods are owned by him or not.

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