Pakistan eCommerce Association (PEA) has urged the government to address tax disparities between domestic e-commerce companies and foreign online marketplaces, calling for reduced tax burdens on local sellers and digital payments. The association warned that current policies are placing indigenous platforms at a disadvantage, harming growth and discouraging entrepreneurship.
PEA Chairman Omer Mubeen said additional government taxes are impacting not only e-commerce businesses but also related industries such as logistics and other allied sectors. He stressed that the uneven taxation is limiting the growth of local enterprises, forcing many small and medium-sized enterprises (SMEs) and women entrepreneurs to close their operations. Mubeen noted that domestic e-commerce companies already contribute significantly through income and sales taxes, and further increases will erode their competitiveness and reduce sales.
In the 2025–26 federal budget, the government imposed new tax rates on local e-commerce businesses, including an 18 percent GST and 0.25 percent to 2 percent tax on cash-on-delivery (COD) and digital payments. International platforms such as Temu, AliExpress, and SHEIN were initially subject to a 5 percent flat tax, but this was later withdrawn, while local taxes remained unchanged.
Shoaib Bhatti, President of PEA Karachi Chapter, said this tax relief for foreign platforms would lead to a continued outflow of foreign exchange, while local e-commerce businesses stimulate economic activity and generate employment. He emphasized that Pakistan’s focus should be on strengthening its digital economy and creating opportunities for its youth, rather than discouraging local entrepreneurship through regressive tax policies. Bhatti called for fair treatment for both COD and digital transactions to ensure balanced growth across the sector.
Industry estimates suggest Pakistan has more than 12,000 major e-commerce players and over 200,000 SMEs operating in the sector, collectively providing direct or indirect employment to more than 500,000 people. Official data indicates the e-commerce market grew by an average of 20–25 percent annually, reaching an estimated value of $7 billion in FY24. Around 70 percent of the industry consists of SMEs that depend on affordable digital tools and logistics to operate sustainably.
PEA reiterated that without equitable taxation, the domestic sector risks losing its momentum, potentially leading to reduced innovation, shrinking employment opportunities, and diminished contributions to Pakistan’s overall economic growth.
