Karachi Tax Bar Association (KTBA) has suggested the revenue authorities to frame rules to bring e-commerce under sales tax laws.
As online business has gained significant momentum particularly amid the coronavirus pandemic, the tax practitioners under the umbrella of KTBA proposed a comprehensive set of rules for e-commerce under sales tax laws. Through digital platforms, a large number of vendors/service providers from the informal economy can reach customers without setting up proper business structure.
It is difficult not only for the tax authorities to capture such activity but also for the compliant taxpayers who want to discharge their obligations under the tax laws. Therefore, it is suggested that relevant provisions be amended, and detailed rules be framed for e-commerce in line with global best practices. It is suggested that digital platforms, due to their control on the transactions, should be held responsible for collection and payment of sales tax where the vendor is unregistered. It is proposed that small vendors earning revenue below Rs5 million be exempted from getting registration under the Act. It is suggested that appropriate provision for exemption from withholding tax should also be introduced.
