The Chainstore Association of Pakistan (CAP) and Pakistan E-Commerce Association (PEA), along with a wide alliance of e-commerce stakeholders—including retailers, freelancers, marketplaces, courier services, and digital platforms—have jointly urged the government to revise the proposed tax and compliance framework in the Finance Bill 2025–26.

Pakistan’s e-commerce sector has experienced over 35% annual growth in the past five years, now representing a Rs. 2.2 trillion ($7.7 billion) market, yet still under 2% of national GDP. With more than 100,000 small sellers supporting over a million livelihoods, industry leaders warn that the current tax proposals could severely disrupt both emerging and established businesses.

While stakeholders endorse fair taxation and documentation, they argue that the proposed measures—rolled out without consultation or transition—could stifle innovation and digital entrepreneurship, particularly for youth and women.

READ MORE:

Govt Directs Oil Companies to Maintain 20-Day Fuel Stock Amid U.S.-Iran War Escalation

The coalition welcomed the 5% digital levy on foreign platforms like Temu and supported data transparency reforms. However, they cautioned that this progress would be undermined by overregulation. Among their key concerns:

• Blanket 2% sales tax withholding without input tax adjustments

• Mandatory sales tax registration for all online sellers, including home-based ones

• Six-tier income tax withholding (0.25% to 2%)

• Fines up to Rs. 500,000 on sellers, couriers, and platforms

• Immediate enforcement from July 1 without any transitional grace period

The stakeholders proposed targeted revisions: limiting sales tax withholding to unregistered (non-ATL) sellers, simplifying tax compliance for home-based entrepreneurs by requiring only income tax registration, applying a flat 0.25% withholding rate, reducing penalties, and reforming provincial digital service taxes.

They also demanded a 2–3 month transition period and urged the Prime Minister, Finance Minister, Commerce Minister, and FBR to delay implementation and engage in structured stakeholder consultations.

The e-commerce coalition reaffirmed its commitment to tax reform that enables compliance without killing innovation, stressing that Pakistan’s digital future hinges on inclusive and practical policymaking.