News Updates

17% Tax Over Online Marketplace-A Nasty Blow

PTI led government in budget 2021-22 announces to impose 17% tax on online marketplace.

Distance is no more a problem…..Today you can buy your choice with “One-click”.

E-commerce brings buyers and sellers to common platforms. Brick and mortar types of businesses all over the world are getting transformed as E-commerce is the future of the global market. Online Marketplace has opened new horizons for businessmen in Pakistan and across the country. With the advent of 5G, the revolution in the online shopping industry of Pakistan is going to happen. But the PTI-led government in budget 2021-22 announces to impose 17% tax over online marketplace which is very discouraging.

E-commerce involves buying and selling goods and services including digital products through electronic transactions via the internet or other computer-mediated networks. The E-commerce industry in Pakistan is flourishing as it involves a limited amount of resources for business start-ups. Passed out youth has a great tendency for becoming entrepreneurs.

Online marketplaces’ (OM) are becoming restless on the proposed amendment under section 3 in 1990’s Sales Tax Act. It was announced in a proposed bill to place these online marketers in “tier 1 retailers” and apply 17% tax on the transactions conducted by them.  Marketers involved in E-business were of the view that the unjustified decision is going to breed un-registered sellers.

The authorities monitoring these online business platforms are required to make difference between physical business points and online selling platforms. Businessmen all over Pakistan are running their businesses on 17 different types of online business platforms They are involved in offering a diverse range of products from Fast Moving Consumer Goods (FMCGs) to industrial items.

Buying and selling of 2nd hand items via these online marketplaces have introduced a new trend all over the country. Under the “OM Model”, the title of goods is not transferred to online marketers. Each online seller is identified and gets a rating by his/her individual standing in the marketplace. Customers make qualified purchase decisions keeping in view this rating.

Muhammad Imran Saleem, Daraz Group’s Vice president (VP) states “this online business model enables small and medium enterprises to drive the digital transformation of business while developing ecosystem in a sustainable manner. The online proposed amendment in sales tax diverts the burden of collecting and depositing sales tax to online marketers. He was of the view that it would be an extra burden on the online marketplace (OM) which can lead towards mushroom growth of unregistered sellers. He further added that frauds are inevitable due to the unregistered sellers.

Business analysts recommend exonerating online marketplaces from all such kinds of taxes as online business platforms in Pakistan are at their introductory stage. Taxation moves by the government would dishearten the entrepreneurs who are struggling hard to earn their livelihoods. Online shopping due to its convenience is trending in Pakistan. But adverse decisions of the sitting government may cause a setback to E-business.

The PTI govt. should take immediate steps to boost up e-markets transactions while lowering tax rates, ensuring consumer protection, availability of quick payments modes, and connecting Pakistan with global online markets. All these measures will revive the confidence of investors and ultimately strengthen the economy.

Abdul Razzaq

Abdul Razzaq is a freelance writer, digital marketer, tech enthusiast and, educationist from Pakistan. He runs Geekydecade (a Business Marketing Blog) to spread business and marketing awareness among the masses.

Related Articles

Leave a Reply

Your email address will not be published.

Back to top button