Federal Board of Revenue has implemented a new sales tax law targeting Pakistan’s growing e-commerce sector in a move to bring digital transactions under tighter regulation and broaden the country’s tax net. Under the amended Sales Tax Rules 2006, digital marketplaces, courier companies, and payment agents must now deduct sales tax on every online purchase, including cash-on-delivery transactions, and remit it to FBR by the 10th of each month.
The updated regulations apply to both digital and offline payments within the e-commerce chain, ensuring uniform taxation across all transaction types. FBR’s formal notification introduces a new chapter in the Sales Tax Rules designed specifically for digital transactions, marking a key milestone in integrating the online marketplace into the formal tax system.
To monitor compliance, FBR has introduced three new monthly reporting forms. STR-34 will be submitted by online marketplaces, detailing all orders and associated suppliers. STR-35 will act as a general monthly return showing the deducted tax amount and will be required from all involved parties in the transaction chain. STR-36 will be mandatory for courier services, especially those also functioning as marketplaces. All these forms must be filed on or before the 10th of each month, enabling more transparent oversight of e-commerce tax collection.
Couriers and payment agents are also required to issue tax deduction certificates to vendors, which must include the vendor’s name and registration number, a description of goods, and the exact amount of sales tax deducted. This measure is aimed at creating a clear paper trail for taxable sales, giving vendors documented proof of their tax compliance.
In parallel with these changes, FBR has amended the Export Facilitation Scheme to streamline procedures and expand the tax base, particularly in the textile sector. One notable change is the removal of the requirement for bank guarantees, with insurance guarantees now accepted as an alternative. However, the amendments also remove certain exemptions, with cotton and related products excluded from the scheme’s scope. Raw cotton, cotton thread, cotton yarn, and grey cloth will no longer be eligible for tax-free import or trade benefits, making them subject to applicable duties and taxes.
These policy adjustments are expected to have a significant impact on e-commerce operators, courier companies, payment processors, and textile traders. By closing gaps in sales tax collection and reducing exemptions in key sectors, FBR is moving towards a more structured and documented digital and trade economy in Pakistan.
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