Understanding Pakistan's New E-Commerce Tax Rules for 2026

Understanding Pakistan's New E-Commerce Tax Rules for 2025

The Finance Bill 2025 has introduced significant changes to tax regulations for e-commerce businesses in Pakistan. Here's what you need to know:

Key Changes:

• New Tax Regime: A final withholding tax regime applies to online sellers, with tax deducted at source being the final liability.
• Applicable Parties: Online sellers, payment gateways, banks, and courier services handling Cash on Delivery (CoD) are affected.
• Withholding Tax Rates:
  • Digital Payments: 1% (up to Rs. 10,000), 2% (Rs. 10,001-20,000), and 0.25% (above Rs. 20,000)
  • Cash on Delivery (CoD): 0.25% (electronics), 2% (clothing), and 1% (other goods)

Compliance Requirements:

• Filing Obligations: Quarterly withholding statements for couriers and banks, monthly statements with vendor-level data for online marketplaces
• Mandatory Registrations: Income Tax and Sales Tax registration for all sellers
• Penalties: Rs. 500,000 for first default if an unregistered vendor is allowed to sell, 100% of tax involved if withholding agents fail to deduct tax or file returns

What to Do Next: If you're operating an e-commerce platform, payment processor, or delivery service, ensure compliance with these new rules starting from the implementation date of the Finance Bill 2025. Review the detailed document for further clarification and reach out to experts if needed.