Pakistan Imposes 2% Tax on E-Commerce Transactions

Pakistan’s 2025–26 federal budget introduces a 2% levy on digital transaction proceeds, targeting domestic online vendors, with banks and courier services designated as withholding agents to ensure collection and compliance.

The Ministry mandates sales tax registration for non-resident e-commerce sellers and marketplaces serving local consumers, extending tax obligations to foreign digital service providers under Pakistan’s VAT-type Sales Tax Act framework.

Pakistan’s sales tax system features an 18% general rate, provincial service taxes, place of supply rules for inter-provincial transactions, and withholding tax obligations, now including digital transactions for enhanced tax enforcement.