Pakistan's GST on Cross-Border Online Sales: Key Insights for E-Commerce

The Pakistan Federal Board of Revenue announced that, following the recommendation of the Institute of Cost and Management Accountants of Pakistan (ICMAP), it is considering introducing the General Sales Tax (GST) on cross-border online sales as part of the upcoming budget for 2025–26.

Taxation of Cross-border Online Sales

The Federal Board of Revenue (FBR) officials emphasized that they are exploring proposals and recommendations to impose a GST on cross-border online sales, specifically to subject international e-commerce platforms facilitating sales to Pakistani consumers to GST requirements.

The ICMAP recommendations view this measure as suitable to address the budget gap created by the fact that global platforms, such as Amazon or AliExpress, do not collect and remit any taxes on their sales. Moreover, the introduction of GST on cross-border online sales would contribute to setting the same rules for domestic and foreign sellers.

Furthermore, the Institute of Chartered Accountants of Pakistan (ICAP) also highlighted the importance of imposing taxes on e-commerce and digital services relating to the e-commerce sector. ICAP's recommendations include several measures to establish a unified national mechanism, addressing the issue of miscommunication between provincial revenue authorities and the FBR.

To establish a more coordinated approach, the ICAP recommended capturing revenues from digital services provided through both domestic and foreign platforms via banks and financial institutions, creating a fair revenue-sharing model among provinces, and allowing service providers to submit a single tax return aligned with the FBR's upcoming sales tax return system.

Conclusion

E-commerce businesses will have to wait until the FBR finishes drafting and publishes the 2025–26 Budget to see if new rules for cross-border online sales will be introduced. Moreover, the 2025-26 Budget proposal should provide insight into when such changes are expected, the implementation timeline, and who will be subject to these requirements. 

Therefore, e-commerce companies should closely monitor for any future FBR announcements relating to the budget for the next fiscal year and GST rules for cross-border sales.

Source: Federal Board of Revenue