IMF Advocates for Implementing Sales Tax on E-Commerce and Other Digital Platforms

The International Monetary Fund (IMF) has put forward a recommendation for the registration of online digital platforms for sales tax in Pakistan, focusing on transactions with local consumers. This recommendation covers a wide range of online entities, including e-commerce platforms like Daraz and Homeshopping, property and vehicle platforms such as and PakWheels, and tech giants like Google and Facebook. 


These platforms, which play a significant role in transactions with consumers, would be required to register for Value-Added Tax (VAT) and be responsible for collecting and remitting tax on sales of digital products/services and low-value goods (LVGs) from non-resident vendors to domestic consumers.


The IMF’s proposal aims to clarify the responsibilities of digital platforms as intermediaries, establishing criteria for which platforms should register and collect VAT based on their level of involvement in the transaction process. This includes platforms that control essential elements of transactions or handle payments. 


The suggestion also extends to VAT-registered businesses and government departments, which would need to self-assess and remit VAT on purchases from non-resident vendors and platforms, with penalties proposed for misuse of VAT registration numbers to evade taxes. This move by the IMF is part of broader efforts to adapt tax frameworks to the digital economy and ensure fair and efficient tax collection from online transactions in Pakistan.