To:

The Honourable Mian Muhammad Shehbaz Sharif
Prime Minister of the Islamic Republic of Pakistan

We, the undersigned stakeholders of Pakistan’s e-commerce ecosystem — including formal sector retailers, small entrepreneurs, e-commerce professionals, online marketplaces, courier services, e-intermediaries, and allied service providers — acknowledge and support the government’s commitment to expanding the tax base and addressing market distortions, particularly in the domestic and cross-border e-commerce space.

However, we wish to express our strong concerns over certain taxation measures proposed in the Finance Bill 2025–26, which may unintentionally harm both the documented digital retail sector and small sellers alike, despite the government’s best intentions.

We respectfully seek your kind intervention to reconsider and revise these proposed e-commerce tax measures for balanced, simplified and effective tax generation.

🔵 The E-Commerce Sector: A National Economic Asset

Pakistan’s digital economy is a powerful engine of growth, innovation, and inclusion. E-commerce, in particular, has:

> Grown at an average annual rate of over 35% over the last five years

> Enabled over 100,000 micro and small sellers, many led by youth and women entrepreneurs

> Created hundreds of thousands of jobs across technology, logistics, and digital services

> Driven rapid adoption of cashless payments, including digital wallets and cards, crossing PKR 538 billion in e-commerce digital payment transactions in 2024 (SBP)

> Attracted growing local and international investment in marketplaces, fintechs, and logistics

This ecosystem supports national goals for digitalization, innovation, job creation, and exports. It must be strengthened, not stifled.

⚠️ Key Concerns with the Proposed Tax Measures

The Finance Bill 2025–26 includes several taxation measures that, if passed without revision, will undermine the digital economy:

> Blanket Sales Tax withholding on already compliant businesses, including registered merchants and market places—penalising formal businesses, e-intermediaries and courier services without any substantial net tax benefit.

> Mandatory Sales Tax registration for all e-sellers, including micro-entrepreneurs, despite income tax registration being sufficient for documentation.

> Multi-rate and complex Income Tax withholdingrequirements on intermediaries, courier services, and sellers—making compliance highly impractical.

> Punitive penalties on intermediaries and platforms for issues outside their direct control.

> Double taxation risk due to overlapping withholding under existing regulations such as Sections 236-G/H of the Income Tax Ordinance 2001.

> Over-taxation of essential digital services such as web hosting, online tools, and advertising, already burdened by high provincial sales taxes.

> Almost immediate implementation timelineswithout giving businesses adequate time to adjust their systems and processes.

✅ What We’re Asking For

We strongly support documentation and fair taxation, but call for the following revisions to ensure growth and compliance go hand in hand:

> Apply Sales Tax withholding only to non-ATL sellers, maintaining current exemptions for compliant sellers registered and active with Federal or Provincial Tax Authorities.

> Allow Income Tax registration to suffice for small and home-based sellers, avoiding excessive compliance requirements related to Sales Tax registration and monthly filings.

> Simplify Income Tax withholding with a single, practical rate and streamline reconciliation for e-intermediaries and courier services.

> Rationalise penalties and avoid imposing harsh compliance burdens on platforms, service providers and sellers.

> Reform Provincial Taxation on digital services to make essential business inputs affordable and prevent outflows through informal channels.

> Implement changes gradually, with a minimum 2-3 month transition period for ecosystem readiness.

📢 Our Request

We urge the Prime Minister and relevant Ministries to:

> Pause implementation of the proposed tax measures;

> Engage in meaningful consultation with all affected stakeholders; and

> Amend the Finance Bill 2025–26 to protect the integrity and sustainability of Pakistan’s digital commerce sector.

We stand ready to collaborate in designing smarter, fairer, and future-ready taxation policies.

Let’s get this right—for Pakistan’s digital future.

-

✍️ Please sign this petition if you are part of the e-commerce value chain and believe in sustainable digital growth.

📢 #EcomTaxCrisis #HeavyComplianceSeBachao #SaveOnlineSMEs