Final Finance Bill 2025: What It Means for Pakistan’s eCommerce Sector:

The Government of Pakistan has officially approved the Finance Bill 2025, ushering in a sweeping set of reforms across income tax, sales tax, customs, and digital services regulation. Among the sectors most directly impacted is eCommerce — which now faces new compliance requirements, tax liabilities, and structural definitions under law.

Here’s a detailed look at the key updates for the eCommerce industry, including sales tax, foreign vendor obligations, intermediary responsibilities, and whether advance income tax is now applicable.

Download copy from here: Click Here

🧾 Key eCommerce Taxation Updates in the Final Bill:

🔹 1.  2% Sales Tax Withholding on Local Digital Orders

📌 Clause 5 (30) — Eleventh Schedule

All couriers and payment intermediaries must withhold 2% sales tax at source on the gross value of digitally ordered goods delivered within Pakistan.

🛍 Applies to:

• Online marketplaces
• Brand websites and mobile apps
• Local businesses supplying goods digitally

This provision formalizes the taxation of digital transactions and brings courier and gateway companies under a collection and deposit mandate.

🔹 2. Significant Digital Presence Rule for Foreign Vendors

📌 Clause 10 — Section 4

A foreign vendor will now be considered to have a “significant digital presence” in Pakistan if:

• Sales exceed PKR 1 million/year, and
• The vendor engages in any of the following:
  
• Billing in PKR or local payment methods
• Delivery/logistics responsibilities
• Customer service or marketing targeting Pakistan
• Collection of user data from local users
  

These vendors will be taxable under Pakistani law, closing the gap for platforms operating cross-border (like Amazon, Shein, etc.).

🔹 3. Liability for Gateways & Couriers

📌 Clause 10 — Section 7

If a payment intermediary or courier fails to deduct or deposit the applicable tax:

• They will be personally liable
• A default surcharge of KIBOR + 3% per annum will apply
• The tax authority may initiate recovery proceedings

This clause places serious compliance responsibility on third parties involved in digital transactions.

🔹 4. Scrutiny of Unregistered Sellers

📌 Clause 5 (15) — Section 37A

Unregistered individuals may face:

• Restrictions on property transfers
• Arrest or prosecution for repeated tax fraud
• Inquiries before enforcement, ensuring due process

This intensifies FBR’s effort to bring informal sellers under the tax net, especially those operating on platforms like Facebook, Instagram, or WhatsApp.

❓ Is There Advance Income Tax on eCommerce?

✅ Short Answer: No specific advance income tax has been imposed exclusively on eCommerce sellers in this final version of the Finance Bill 2025.

However, there are related observations:

🔸 Clause 8 (18) — Section 114C:

This clause addresses restrictions on cash withdrawals from bank accounts of ineligible persons (i.e., unregistered individuals). While it doesn’t directly impose advance income tax, it limits transaction flexibility unless tax registration is complete.

🔸 Clause 8 (31 & 34):

The law continues to streamline withholding taxes under Sections 153 and 236A — which could impact marketplaces or sellers dealing with auctions, lease rights, or toll collection, but not general eCommerce directly.

Summary Table

The Finance Bill 2025 signals a maturing regulatory environment for Pakistan’s digital economy. While it aims to document the ecosystem and generate revenue, the sudden tax burdens — especially on logistics players and digital startups — could increase friction unless rolled out gradually.

🔁 Industry dialogue and clarity from FBR on how enforcement will proceed are crucial for avoiding confusion and ensuring that growth is not stifled.