KARACHI: The Federal Board of Revenue (FBR) has issued new regulations for online businesses including courier service companies and released a draft amendment to the Income Tax Rules in an effort to bring the digital economy into the tax net.
According to the FBR, amendments have been made to the Income Tax Rules 2002 to ensure taxation of the country’s digital economy.
The FBR’s SRO states that every online business entity will be required to submit monthly financial reports. Businesses will have to provide financial details on Form A1 and Form A2.
As per the SRO, online businesses will have to submit details including their National Tax Number (NTN), monthly bank account statements, seller’s name, address, and invoice number.
All courier service companies across the country will also be required to submit financial details to the FBR on a quarterly basis, for which Form 1 has been issued.
Companies providing online financial services must separately declare tax details on their services, while online businesses will be required to submit an affidavit along with tax information, the FBR said.
The FBR has also invited stakeholders to submit feedback on the draft amendments within seven days.
Earlier, the had placed a ceiling of Rs200,000 on cash transactions at retail outlets and on cash-on-delivery (CoD) orders in the e-commerce sector, as part of a push to bring more businesses into the digital net.
The FBR announced the measure through a new income tax circular, extending to online purchases a cap already in place for physical retail. Officials say the move is designed to curb large-scale cash dealings and nudge buyers and sellers towards digital payments.
Shift towards cashless economy
Pakistan has one of the lowest rates of digital payment adoption in South Asia, with many buyers still preferring CoD.
By extending the cap to online platforms, the FBR hopes to encourage both consumers and businesses to rely more on bank transfers, mobile wallets and other digital methods.
Under the new rules, e-commerce transactions carried out through online marketplaces or individual websites will now be subject to taxation. Payment intermediaries such as banks, forex dealers and digital gateways are required to withhold a 1 percent tax on digital transactions, while courier companies handling CoD will deduct 2 percent before passing payments to sellers.
The collected tax will count as final income tax on both domestic and export sales, and must be deposited monthly into the national treasury. Couriers and payment intermediaries are also required to submit regular statements to the FBR.