Banks Warn of Major Issues in New E-Commerce Tax in Budget

The Pakistan Banks Association (PBA) has raised serious concerns about the workability of the government’s newly proposed tax regime for e-commerce, warning that key parts of the plan lack clarity and could be unfeasible to implement without detailed guidelines. The Finance Bill 2025 introduces a new framework to tax e-commerce transactions, including a final tax of 0.25-2 percent on gross receipts from digitally ordered goods and services. It mandates that online sellers register with the Federal Board of Revenue (FBR) and places significant obligations on intermediaries such as payment processors, online platforms, and courier companies. The PBA questioned how this system would function in practice. Among the major concerns is the ambiguity around which rate( 0.25/1/2 percent) applies to which type of seller or platform. The association also noted the lack of a precise definition for “digitally ordered” transactions, pointing out that hybrid models like WhatsApp or phone-based orders could fall into a grey area. Another sticking point is the undefined role of payment intermediaries. The PBA asked whether banks, wallet providers, and fintechs would all be lumped into this category and if they are expected to enforce compliance, a role the association suggests is too complex without clear directives. Courier companies may also find themselves in uncharted territory. The banks questioned the feasibility of this mechanism, especially in the absence of automated systems or integration with point-of-sale or inventory software. PBA highlighted the complete absence of an implementation timeline or transition phase, suggesting that a sudden rollout could overwhelm the ecosystem and result in compliance failures across the board. The association argued that without detailed rules, digital infrastructure, and coordination across platforms, the new tax regime may create more confusion than compliance.