Representatives of Pakistan’s online business sector have called on the government to rationalise the proposed tax measures in the Finance Bill, warning that sudden and complex taxation policies could disrupt the growth of e-commerce and undermine formalisation efforts in the economy.
Pakistan E-Commerce Association (PEA) Karachi Chapter President Shoaib Bhatti said the new taxes would place an excessive compliance burden on both large and small online sellers. He urged the government to withdraw the proposed additional 2 percent withholding sales tax on the e-commerce sector, which is already paying 18 percent general sales tax.
In contrast, he said, informal sellers operating in major shopping areas do not pay any taxes.
Bhatti said Pakistan’s e-commerce sector has grown at an annual rate of over 35 percent over the last five years, with more than 100,000 active small online sellers currently supporting the livelihoods of over a million people nationwide. He said that increasing the tax burden would slow the sector’s progress and reduce its contribution to the national economy.
The total market size of Pakistan’s e-commerce sector is estimated at Rs2.2 trillion, or $7.7 billion, which is less than 2 percent of the national GDP and around 4 percent of the total retail segment.
Bhatti said that rather than encouraging documentation, the new tax measures could push online businesses back into the informal sector or force them to close. He said the Finance Bill introduces multiple taxes and complicated compliance procedures without consultation or phased implementation, creating challenges for online sellers.
Saad Shah, CEO of Ucaaz, said that online businesses already comply with tax regulations and operate through formal digital payment systems. He said further increasing the tax burden will harm regulated platforms that provide branded products, customer discounts, and tax revenue for the government, unlike many sellers in informal retail markets.
He warned that disrupting the sector would affect all stakeholders, including small sellers and consumers.
In Lahore, the Pakistan E-Commerce Association sought support from the Lahore Chamber of Commerce and Industry to help protect the sector from the negative impact of the proposed taxation measures. During a meeting with LCCI President Mian Abuzar Shad, the PEA delegation said the sudden introduction of complex tax rules without consultation has created confusion and fear among sellers and marketplaces.
Former LCCI President Muhammad Ali Mian, delegation members Shahbaz Siddique and Imran Haider, and executive committee members Khurram Lodhi, Amina Randhawa, and Rana Muhammad Nisar attended the meeting. The delegation said the government’s recent policy changes include vague legal definitions, raising concerns about operational uncertainty in the industry.
