Karachi, August 10, 2025 – The Finance Act, 2025 has introduced major reforms in Pakistan’s taxation framework, specifically targeting the rapidly growing online marketplace sector.
These changes aim to clearly define the scope of online platforms and ensure proper tax compliance for digital transactions.
Under the amended Income Tax Ordinance, 2001, an online marketplace is defined as an information technology platform operated by an e-commerce entity over an electronic network, acting as a facilitator between buyers and sellers. This includes “online interfaces” that, for a fee, enable direct interaction between multiple buyers and sellers through digital orders for goods or services — regardless of whether the platform assumes economic ownership of the goods or directly provides the services.
The Federal Board of Revenue (FBR) clarified that tax will be imposed on payments received for digitally ordered goods or services delivered from within Pakistan via locally operated e-commerce platforms, including any online marketplace or website. The tax rate, as specified in Division IVA of Part I of the First Schedule, applies to the gross receipts of such transactions, with certain export proceeds under sections 154 and 154A exempted.
By establishing a transparent definition and tax mechanism, the government aims to regulate the online marketplace sector, boost revenue collection, and promote fair competition in Pakistan’s digital economy.