Islamabad: The Pakistan eCommerce Association (PEA) has urged the government to reduce the tax burden on the local e-commerce sector and digital payments to provide a level playing field for online sellers and domestic shopping platforms compared to foreign marketplaces.
Tax Burden Hurting Local Businesses
The imposition of additional government taxes is negatively impacting the overall e-commerce ecosystem, including logistics companies, allied sectors, and overall business activities, said Omer Mubeen, Chairman of the Pakistan eCommerce Association (PEA).
“The tax disparity is not only limiting the growth of local businesses but is also forcing hundreds of small and medium enterprises (SMEs) and women entrepreneurs to shut down,” he added.
Call for Tax Relief
The association has called on the government to provide tax relief to the e-commerce sector, pointing out that major local companies are already paying substantial amounts in income and sales taxes.
“The increase in taxes will not only reduce the competitiveness of local players but will also hurt the sales of domestic e-commerce companies,” Mubeen said.
Disparity in Taxation Policies
In the 2025–26 federal budget, the government levied new taxes on indigenous e-commerce companies at different rates, such as 18% GST and 0.25% to 2% cash-on-delivery and digital payment taxes.
The government had initially imposed a 5% flat tax on international online platforms like Temu, AliExpress, and SHEIN, but later withdrew it. However, taxes on local e-commerce platforms remained unchanged.
Demand for Uniform Tax Rates
Shoaib Bhatti, President of the Pakistan eCommerce Association – Karachi Chapter, said the sector is demanding a flat rate of 0.25% on both cash-on-delivery and digital payments instead of complete taxation exemption.
“The removal of taxes on foreign e-commerce platforms will continue to cause an outflow of foreign exchange from the country, whereas domestic e-commerce companies generate business activity and create employment opportunities within the local economy,” he said.
Impact on Digital Economy & Employment
“At a time when Pakistan needs to expand its digital economy and create opportunities for its youth, these regressive tax policies will only push entrepreneurs out of business. We strongly urge the government to ensure a level playing field for all segments of the economy both COD and digital instead of discouraging online entrepreneurship,” Bhatti added.
E-Commerce Growth & Contribution
According to industry estimates:
- There are over 12,000 major e-commerce players and more than 200,000 small and medium-sized operators in Pakistan.
- The sector provides direct or indirect employment to over 500,000 people.
Pakistan’s e-commerce industry has been growing at an average annual rate of 20–25% and is currently valued at approximately USD 7 billion (FY 2024). Nearly 70% of this ecosystem is driven by SMEs, which rely heavily on affordable digital tools and logistics to sustain operations.
