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Pakistan 2% marketplace e-commerce withholding sales tax Sept 2021

Pakistan has imposed a 2% withholding sales tax on marketplaces’ third-party sales. This came into effect on 1 September 2021 according to the Pakistani Federal Board of Revenue Ordinance No. XXII of 2021.

Pakistan backtracks on e-commerce VAT

This is a reversal of the plan earlier this year to introduce 17% VAT on e-commerce sellers. The Pakistani Federal Board of Revenue was persuaded by marketplace arguments that sellers would evade registration and tax payments.

B2B transactions online are not included. It is not yet clear how the sellers will be able to claim and report the Withholding Tax.

Global digital tax reforms

Many countries around the world are resorting to Withholding VAT or Digital Services Taxes on platforms due to the difficulties of administering VAT. DST are liable to be withdrawn as the OECD Inclusive Framework for a two-pillar reform of the global tax regime with a particular focus on digital income earned in countries where there is no permanent establishment.

VAT Calc’s global VAT and GST on digital services blog keeps a live update on how countries are imposing indirect taxes on non-resident providers and electronic marketplaces.

Asia Pacific VAT on digital services

Comments (click for details) Rate Date Threshold Comments
Australia 10% Jul 2017 AUD $75,000
Azerbaijan 12% Jan 2017
Armenia 20% Jan 2022 AMD 115million
Bangladesh 5% - 15% Jul 2019 B2B and B2C
Bhutan 7% Jul 2021 Nu 5million
Cambodia 10% Mar 2022 KHR 250m
China 6%-13% N/a Nil Withholding VAT; B2B and B2C
Fiji 9% TBC FJD 300,000
India 18% Jul 2017 -
Indonesia 11% Aug 2020 IDR600m or 12k customers
Japan 10% Oct 2015 JPY 10 million
Kazakhstan 12% Jan 2022 Nil
Kyrgyzstan 12% Jan 2022 Nil
Laos 10% Feb 2022 LAK 400m
Malaysia 8% Jan 2020 RM500,000
Nepal 13% Jul 2022 Rupees 2m Also 2% DST
New Zealand 15% Oct 2016 NZD 60,000
Pakistan 2% Sep 2021 Nil Marketplace Withholding VAT
Palau 10% Jan 2023 $300,000
Philippines 12% 2024 ? P 3million
Singapore 9% Jan 2020 S$ 100,000
South Korea 10% Jul 2015 Nil
Sri Lanka 18% 2025? LKR 60m Proposals only
Taiwan 5% May 2017 NTD 480,000
Tajikistan 14% Jan 2021
Thailand 7% Sep 2021 1.8m Baht
Uzbekistan 12% Jan 2020 Nil
Vietnam 10% Dec 2020


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