ISLAMABAD – Commercial banks have called on the government to delay implementation of newly introduced taxes on e-commerce payment operators and merchants, saying the banking industry lacks the infrastructure to automate tax deductions at present.
The request, submitted through the Pakistan Banks Association (PBA), follows the government’s move to tax digital transactions in the e-commerce sector — part of a wider effort to capture untaxed revenue from Pakistan’s growing online economy.
According to sources in the banking sector, no tax is currently being deducted from e-commerce operators because banks haven’t developed systems to automatically apply the taxes imposed in the latest budget.
“These taxes can’t be collected manually at such a large scale,” said a senior banking official. “E-commerce platforms might charge their customers directly, but banks lack the capacity to withhold tax from every digital transaction operator.”
Under the new policy, the government has imposed taxes between 2% to 5% on digital payments made through e-commerce gateways and merchants. The measures, however, exclude foreign digital sellers and social media ads from tax liability.
Banking officials say they’re actively working on developing tax integration solutions but need more time to fully implement the changes without disrupting online transactions.
The lack of readiness comes at a time when Pakistan’s e-commerce sector is surging in activity. As per the State Bank of Pakistan (SBP), more than 213 million online payments were made in the third quarter of FY25, representing a 40% growth in volume and 34% rise in value, amounting to Rs. 258 billion.
An estimated 10,000 e-commerce operators are currently registered with banks, reflecting the scale and potential impact of the policy.
Industry insiders argue that while the move to tax e-commerce is understandable, its success hinges on giving banks and digital platforms enough time to set up proper withholding and reporting mechanisms.