Pakistan’s Federal Board of Revenue (FBR) has unveiled a robust set of new tax rules targeting the country’s rapidly expanding e-commerce sector. These regulations are designed to bring online sellers and courier services under tighter government oversight, with the goal of curbing tax evasion and formalizing digital trade.
Mandatory Registration Now Required for All Online Sellers
One of the most significant changes is that every online seller operating in Pakistan must now register with the FBR. This requirement extends across all digital marketplaces and courier services, which have been instructed to suspend service immediately to any seller who isn’t officially registered. This crackdown signals the government’s intent to clamp down on informal businesses that have flourished without contributing taxes.
Courier Companies and Payment Processors to Act as Tax Collectors
Courier firms and payment agents now have an official role in tax collection—they must withhold sales tax on every online transaction, including cash-on-delivery (COD) sales. The collected tax is to be forwarded to the FBR monthly by the 10th day. To maintain transparency, couriers and payment services are also responsible for issuing tax deduction certificates to sellers, outlining the transaction details and tax withheld.
New Reporting Requirements to Boost Transparency
To monitor these changes, the FBR has introduced three key monthly reports:
- STR-34: Submitted by online marketplaces, detailing suppliers and orders.
- STR-35: A general tax return covering all involved parties.
- STR-36: Specifically for courier companies, particularly those functioning as marketplaces.
These reports must be submitted by the 10th of each month, ensuring a clearer view of the entire e-commerce supply chain.
Legal Backing and Consequences for Non-Compliance
The FBR’s new enforcement regime is firmly grounded in recent amendments to the Income Tax Ordinance and the Sales Tax Act. Violations could result in steep penalties, audits, and the potential suspension of operations for marketplaces and couriers who engage with unregistered sellers. This legal framework makes it clear that non-compliance will not be tolerated.
Tax on Digital Payments and COD Orders Introduced
Another important development is the imposition of a 1% withholding tax on all digital payments processed through banks, fintech companies, and payment gateways. For COD transactions, couriers are required to deduct a 2% tax before releasing funds to sellers. These steps ensure that even informal payment channels contribute to the country’s tax revenue.
Additional Tax Changes from the Finance Act 2025
Beyond the e-commerce sector, the Finance Act 2025 brings several other notable tax updates, including:
- A phased increase of sales tax on industrial units in FATA and PATA, starting at 10% in mid-2025 and rising to 18% by 2029.
- Removal of exemptions on imported solar panels, now taxed at a reduced rate of 10%, aimed at supporting local manufacturers.
- Revised exemptions for certain imported drugs used for personal medical treatment.
- Changes to the Export Facilitation Scheme, such as excluding cotton products and substituting bank guarantees with insurance guarantees.
What This Means for Pakistan’s Digital Economy
The FBR’s new tax regime represents its most comprehensive attempt yet to regulate Pakistan’s digital marketplace. By mandating registration, enabling real-time tax withholding, and enforcing strict monthly reporting, the government is pushing for greater accountability in e-commerce. Online sellers, courier companies, and payment platforms now face a critical choice: comply and adapt to the new system, or risk severe penalties and disruption of their operations.
As these rules take effect, the broader impact on the competitiveness of Pakistan’s online market and courier sector remains to be seen. However, the clear message is that the era of informal, untaxed online selling is coming to an end.
