In a bid to support Pakistan’s rapidly growing E-Commerce sector and support small and medium enterprises (SMEs), Federal Minister for Commerce Jam Kamal Khan and Federal Minister for IT and Telecommunication Shaza Fatima Khawaja have proposed key revisions to the government’s taxation and regulatory framework.
The development came during a high-level meeting held to address key issues in eCommerce sector, read a statement released by the Ministry of Commerce on Thursday.
“In line with the consultative approach of the forthcoming policy, Minister of Commerce Kamal Khan announced the formation of a joint working group, with input from the IT Ministry, to gather comprehensive recommendations on taxation, vendor compliance, and digital payments,” read the statement.
The group’s findings will be formally presented to Prime Minister Shehbaz Sharif for final consideration.
The federal government, in its budget presentation for fiscal year 2025-26 on Tuesday, announced a 5% withholding levy on payments made to domestic and international digital vendors (e.g., Amazon, Google, Facebook, Netflix, Daraz, Temu, PakWheels) for goods or services delivered to Pakistani consumers.
Moreover, an 18% standard VAT is being proposed for online marketplaces facilitating the sale of both goods and services (e.g., Daraz, OLX, Zameen, PakWheels), which aims to standardise tax treatment and close revenue gaps-especially for platforms acting as intermediaries.
Meanwhile, during the meeting on Thursday, Kamal confirmed that eCommerce Policy 2.0 is in its final stages of internal review and will soon be submitted for cabinet approval.
Pakistan’s eCommerce sector has witnessed rapid growth, reaching a market size of $7.7 billion in 2024, with projections estimating a 17% compound annual growth rate through 2027.
The ministers reiterated their commitment to fostering an inclusive, competitive, and digitally empowered trade ecosystem, and arising issues faced shall be addressed at the highest level.