Ever since the arrival of 3G/4G in Pakistan, the local e-commerce industry has really blossomed and reached new heights. Recent times have seen strong growth in the sector, especially in terms of overall sales and number of customers.
The growth and potential of the e-commerce sector in Pakistan has influenced traditional industries to also benefit from the trend. Most of these commercial entities have either gone online as well or partnered with online stores to boost their sales.
Although this may sound like a bold statement for Pakistan’s still nascent e-commerce sector, experts believe that the country will generate $1 billion in revenues from it by 2020.
A Step Back
However, the e-commerce industry is now facing a troubling situation as a 0.5 percent tax has been imposed on any businesses done through online trading by the Federal Board of Revenue.
An Income Tax Circular was issued earlier this month where a new tax on concessionary basis has been imposed. The circular read:
…online marketplace under Section 2(38B) of the Income Tax Ordinance, 2001, which has been defined as an information technology platform run by an e-commerce entity over an electronic network that acts as a facilitator in transactions that occur between a buyer and a seller.
In simpler terms, any person or organization running an online marketplace will now be subject to concessionary rate of a minimum tax under section 113.
The tax will be applicable from 1st July, 2017.
Daraz Pk (Will Increase the Price More )
Do you even know the busiess model of daraz?
@khwaja. Yes their core business model is overpricing and increasing shipping cost at every additional quantity of the same item even though TCS has per kilogram price. For example i was trying to buy Phillips LED lights, they were overpriced and kept multiplying the shipping cost with every increased quantity. I hope you know that a single bulb doesn’t weigh more than 100grams.
This isn’t the business. Have some orange juice and chill.
KHAWAJA NAVEED HAIDER Do you even know the spellings of Business? Before pointing fingers at others make sure your own hands are clean…
Forget the typos dude. Answer the question.
Am i murderer of someone? What if I make a typo? Does that mean I ain’t literate?
Price higher than Markets (That Enough for Leave the Daraz)
This isn’t my question. Anyways you’re ignorant in this case. So i won’t comment anymore.
Lagy Raho Munna Bhai… :)
You people are those criminals who support avading taxes… Why you are worried???? 0.5% tax is not high as you already know these online stores earn 30-50% profit. I think, there should be 2% tax on these so called shopping Mela’s.
Troubling situation my foot.
which online store is earning 30-50% profit?
Are you in any kind of online business?
I love this
“The tax will be applicable from 1st July, 2017.”
Characteristic of our incompetent government. Bhai why backdate from July 1 2017 why not July 1 1995 when internet started in pakistan. They have no consideration for the amount of inconvenience they cause retailers. Just a joke.
Please don’t vote such incompetent fools into power
“In simpler terms, any person or organization running an online marketplace will now be subject to concessionary rate of a minimum tax under section 113”
Minimum tax on income of certain persons (section 113):
2. When applicable
If tax payable (other than tax payable or paid as final tax) is zero or less than minimum tax on turnover because of:
(a) Loss for the current of earlier year,
(b) Exemption from tax, or
(c) Rebates of credits
3. When not applicable
This section shall not apply to a company which has declared gross loss before set off of depreciation and other inadmissible expenses. However if the loss is arrived at by setting of depreciation and other inadmissible expenses of by changing accounting pattern, the Commissioner Inland Revenue may ignore such claim and proceed to compute the tax as per historical accounting pattern.
Clearly author needs to understand our taxation system before floating such article.
Tax hungry Mr. Dar will leave nothing behind in his regime:(
His motto should be … Tax everything and possibly high, which is in the range of a common man, and launder it.
Bera garak