ISLAMABAD – Commercial banks have approached the federal government, requesting a temporary deferral in the implementation of tax deductions on e-commerce payment operators and merchants, citing the lack of an automated system to process such taxes.
Sources in the banking sector told ProPakistani that banks are currently not deducting taxes from e-commerce platforms due to the absence of a digital mechanism for automatic tax collection. The issue arose after the government introduced new tax measures in the recent budget aimed at broadening the tax base and generating additional revenue from the booming digital commerce sector.
The new policy imposes taxes ranging from 2% to 5% on digital transactions made via local and international e-commerce platforms, including payments processed by gateways and merchants. However, foreign online sellers and social media ad platforms have been exempted from these taxes.
An official familiar with the matter stated, “Banks cannot build a tax deduction system overnight. While an e-commerce company may collect taxes from its customers, the banks themselves currently have no technical capacity to automatically deduct taxes from payment operators.”
Through the Pakistan Banks Association (PBA), commercial banks have raised the issue with the State Bank of Pakistan (SBP) and the Federal Board of Revenue (FBR), requesting a grace period until the necessary systems are in place.
“Developing such infrastructure takes time. At this stage, withholding taxes through e-commerce operators presents a major challenge,” said a senior banking official.
According to the SBP, there are around 10,000 e-commerce merchants registered with banks. Digital commerce is witnessing rapid growth, with over 213 million online transactions recorded in the third quarter of FY25 alone — a 40% jump in volume and a 34% increase in value, reaching Rs. 258 billion.
The government’s taxation push on the digital economy reflects a broader effort to regulate and monetize the growing e-commerce ecosystem, but stakeholders warn that implementation without proper infrastructure could create more confusion than compliance.
