- IMF discussions focus on spending reductions, higher tax revenue.
- Online shopping considered as a keyword of tax revenue.
- FBR may require platforms to perceive the sales tax.
Islamabad: the government is considering various measures to pass the electronic trade under the tax umbrella in the next budget of 2025-2026, aimed at drawing from the digital retail sector fast growing, The news reported Tuesday.
Managers assess several approaches to increase online purchase income, which has become a common part of consumer behavior, especially among medium and higher income households in the country’s main urban centers.
The Federal Board of Return (FBR) envisages options to impose the general sales tax (TPS) with provisions to allow the deduction of 3% tax from the customer by the delivery man on cash delivery in the name of the FBR, which will be deposited in the national Kitty. The remaining 15% TPS can be collected by the manufacturer and integrated into the cost of the product.
Pakistan and the International Monetary Fund (IMF) will launch Wednesday virtual talks (today) to finalize the next 2025-26 budget, in particular by reducing expenses and increasing tax revenue in order to restrict the budget deficit aligned with the objective of the IMF of 5.1% of the GDP for the next fiscal year.
Different governments of the country have failed to bring millions of retailers into the effective tax net despite the efforts in the past, and the regime in place has encountered the same failure as its Tajir Dost program could not attract retailers to enter the tax net. Now online purchases have been identified as another area that can be introduced into the tax net.
The FBR also plans to expand the tax net via the purchase of products via debit / credit cards. There is a right of federal excise (Fed) invoiced on international payments on credit cards or debit cards, but on local sales, no Fed is imposed.
The FBR conducted a study and found that there is enormous potential because online purchases have become an increasing trend in the country’s urban areas.
“We are considering options to bring online purchases or electronic commerce in the tax net from the next budget. We have estimated that online purchases have become an increasing phenomenon in Pakistan. So different tax proposals will be discussed with the IMF team, which will start parliays from Wednesday (today),” said a manager.
The FBR will propose changes to the tax law and make compulsory for online markets or even those that operate as markets without having the inventory, to collect and file the sales tax on behalf of the government. However, tax experts have severely opposed this proposed tax measure, arguing that if online purchases are taxed, this will result in a loss of this growing but emerging trend in the country.
However, the tax authorities believe that this is the appropriate step to bring online purchases into the tax net, because if it develops without tax mode, it will become more difficult to convince people to enter the tax net.