Islamabad — Pakistan’s tax authority is taking a hardline approach to digital commerce, effectively shutting out any unregistered online sellers from doing business across platforms, payment channels, and courier networks.
The Federal Board of Revenue (FBR) has rolled out sweeping measures this week that target the country’s fast-growing e-commerce sector. Under the new policy, anyone selling products or services online without an official FBR registration is now barred from accessing major commercial infrastructure — including banks, courier companies, and digital marketplaces.
Major Services Ordered to Cut Ties with Unregistered Sellers
Banks, fintech firms, delivery services, and online marketplaces have been instructed to immediately suspend services for non-compliant sellers. That includes blocking transactions, refusing parcel shipments, and denying access to digital storefronts.
“If you’re operating online without FBR registration, you’re essentially invisible to the system — and now also cut off from it,” said a senior FBR official, signaling that enforcement won’t be lax.
New Tax Structure Targets Digital and Cash Payments
The reforms also introduce automatic tax deductions on every online transaction. All digital payments — whether through banks or fintech services — are now subject to a 1% withholding tax. Meanwhile, cash-on-delivery (COD) orders face a higher 2% tax, which courier companies are now legally required to deduct before handing over payments to sellers.
These changes fall under amended provisions of the Income Tax Ordinance (Sections 6A and 153(2A)) and are designed to plug tax evasion in an industry long seen as under-regulated.
Courier and Platform Operators Now Accountable
Interestingly, the responsibility for tax collection and reporting doesn’t stop at the seller. Aggregators, delivery firms, and digital platforms are now on the hook too.
They must submit monthly returns detailing every transaction processed — including seller information, payment method, and tax deducted. Non-compliance could result in audits, fines, or even shutdowns.
Under Section 3(7A), smaller online sellers will also face a simplified — though stricter — tax regime: taxes collected will be treated as their final liability, and they won’t be able to claim input tax credits.
Foreign Sellers Pulled into the Net
In a major policy expansion, even foreign companies selling into Pakistan’s digital market are now expected to register with the FBR. New amendments (Sections 14(1A) and 14(1B)) require both domestic and international e-commerce operators to comply with Pakistan’s tax regulations if they’re targeting Pakistani consumers.
Industry Faces Compliance Shock
Tax professionals have described this as the most aggressive move ever taken to formalize Pakistan’s e-commerce landscape. While it could help bring thousands of previously undocumented sellers into the tax net, many experts warn that the sudden shift may overwhelm small businesses operating on slim margins and limited administrative capacity.
With courier companies now doubling as tax agents, and digital platforms required to police their own seller bases, the move represents a seismic shift in how Pakistan regulates its digital economy.
Whether this initiative will stabilize the sector or spark chaos among smaller sellers remains to be seen. But one thing is clear: the era of operating in the shadows is rapidly coming to an end.
