Pakistan E-Commerce Platforms to Collect 18% Sales Tax

In a move set to reshape Pakistan’s digital marketplace landscape, Finance Minister Muhammad Aurangzeb announced today that e-commerce platforms will now bear responsibility for collecting an 18% sales tax directly from their sellers. The policy, revealed during the 2025-26 budget speech, aims to “level the playing field” between traditional retailers and fast-growing online businesses.

The decision comes as Pakistan’s e-commerce sector reports consistent double-digit growth, with platforms like Daraz, Amazon-backed sellers, and food delivery services outpacing brick-and-mortar stores in revenue expansion. Until now, tax enforcement on individual digital sellers remained fragmented, creating what Aurangzeb termed “unfair competitive advantages.”

18% Sales Tax Collection: How the New System Works?

Starting July 1, 2025:
Platforms providing sales/logistics services (marketplaces, food apps, and payment gateways) must collect tax at the source.
Tax liability shifts from individual sellers to platforms.
Revenue targets: The government expects PKR 57 billion+ in new collections.-‘

The “Level Playing Field” Argument

Traditional retailers have long argued that small online sellers evade taxes due to weak enforcement. “When a street shop pays 18% tax but its digital competitor pays zero, that’s market distortion,” noted Karachi Electronics Dealers Association head Rahim Khan. The policy directly responds to these concerns.

What Sellers Should Expect

While large platforms can absorb compliance costs, industry analysts warn of ripple effects:
Price hikes: Sellers may increase product costs to offset tax burdens.
Margin squeeze: Small home-based sellers operating on thin profits could face viability challenges.
Formalization push: Informal sellers must register with FBR to operate on major platforms.

A Global Precedent?

Pakistan joins India, Turkey, and the EU in holding digital intermediaries accountable for seller taxes. This isn’t innovation—it’s inevitability. Where e-commerce thrives, tax systems adapt.

For small sellers, this means adapting pricing and operations overnight. While larger platforms can absorb changes, micro-entrepreneurs face new compliance hurdles. Ultimately, success hinges on implementation, ensuring fairness without stifling the digital dynamism Pakistan’s economy needs.

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