The Pakistan government has included new taxes on Online Shopping. These taxes will be imposed on both local and foreign e-commerce platforms.
The changes were incorporated by the officials in the Finance Bill 2025. They amended the Income Tax Ordinance, 2001, to make the definition of e-commerce and digital services clear. According to the bill, e-commerce is defined as the purchase or sale of goods and services via websites, applications, or online marketplaces.
Digital services are also captured in the bill. These are video and music streaming, cloud storage, online software, telemedicine, e-learning, and online banking.
Local platforms are now required to pay tax on every sale in Pakistan. In case a customer pays digitally and the sum is less than Rs10,000, he or she will pay 1 percent tax. And 2% tax will be charged, should they pay between Rs10,000 to Rs20,000. The tax will be reduced to 0.25% on payments exceeding Rs20,000.
The customers opting to use cash on delivery will also pay tax. Electronics will be taxed at 0.25 percent. Tax on clothing will be 2 percent. A 1 percent tax will be imposed on all other items.
When payment gateways process digital transactions, they will calculate taxes. Customers paying through cash will have taxes collected by the delivery companies. This regulation concerns logistics companies, food delivery applications, and taxi-hailing.
The new regulations also bring online sellers under tight control. Platforms should ensure that vendors are registered under the Sales Tax Act, 1990. In case sellers are not registered, platforms should not allow them to sell.
New Digital Taxes on Foreign Vendors, Social Media Ads.
The Finance Bill proposes the following new law: the Digital Presence Proceeds Tax Act, 2025. This legislation is aimed at foreign websites which sell to Pakistanis without having a physical presence in the nation.
Such companies as Amazon, AliExpress, and Temu are subject to this law. In case they enjoy huge digital presence in Pakistan, they are liable to pay tax. All the online sales made to a customer in Pakistan will be charged with a 5 percent tax.
New taxes on Online Shopping should be withheld by banks and payment platforms during the transaction. This will be followed by them sending the money to the government. Failure to which they will not collect the tax, customs will not deliver the goods.
Before delivering an imported item, courier companies are required to show evidence of payment of tax. Failure to which, customs will block the package.
Online advertising is also captured in the new bill. A 5 percent tax on ad expenditures applies to foreign vendors who place advertisements in Pakistan through Facebook, Google, or Instagram.
The payment platforms and ad networks are required to submit quarterly statements displaying the amount of tax they withheld and paid. Inability to file such reports will attract a fine of Rs1 million per quarter.
These tax reforms will target to control the rapidly expanding digital economy in Pakistan. The government is interested in making sure that the local and international players pay their part in the national revenue. These new regulations will mean increased expenses and enforcement to both the consumers and sellers.
