The Pakistan eCommerce Association (PEA) has voiced strong opposition to the government’s recent taxation policies, which it says are placing local online sellers at a competitive disadvantage compared to international marketplaces such as Temu, SHEIN, and AliExpress. The association is urging policymakers to reduce the tax burden on domestic e-commerce platforms and digital payments, aiming to provide a fairer business environment for Pakistani entrepreneurs.
According to PEA Chairman Omer Mubeen, the imposition of higher taxes is disrupting the entire e-commerce ecosystem, affecting logistics providers, allied industries, and overall economic activity. He stressed that the existing tax disparity is not only slowing the growth of local e-commerce businesses but is also forcing many small and medium-sized enterprises (SMEs) and women-led startups to shut down.
PEA has appealed to the government for tax relief, pointing out that domestic e-commerce firms already contribute significantly through income tax and sales tax. Mubeen warned that increasing taxes further would erode their competitiveness and reduce sales volumes for local online sellers.
The 2025–26 federal budget introduced new tax measures targeting local e-commerce businesses, including an 18 percent General Sales Tax (GST) and additional levies ranging from 0.25 percent to 2 percent on cash-on-delivery (COD) and digital payment transactions. In contrast, the government initially imposed a flat 5 percent tax on foreign online marketplaces but later withdrew it, leaving local players shouldering the heavier tax load.
Shoaib Bhatti, President of PEA’s Karachi Chapter, criticized the move, stating that the removal of taxes for foreign platforms would lead to a continued outflow of foreign exchange, while local e-commerce companies create jobs and stimulate the domestic economy. He emphasized that at a time when Pakistan should be expanding its digital economy and generating opportunities for its youth, such policies risk discouraging entrepreneurship and innovation.
Industry data suggests there are over 12,000 major e-commerce platforms in Pakistan, alongside more than 200,000 smaller operators, collectively providing employment to over half a million people. The sector has been experiencing an annual growth rate of 20–25 percent and was valued at approximately $7 billion in FY24. SMEs account for nearly 70 percent of the market and depend heavily on affordable digital tools, payment systems, and logistics to sustain their operations.
E-commerce stakeholders warn that without corrective policy measures, Pakistan risks stalling one of its fastest-growing economic sectors. By ensuring a level playing field between local and foreign platforms, the government could secure both the sustainability of homegrown businesses and the broader growth of the country’s digital economy.
