Pakistan is set to introduce a 'Digital Bill' to regulate digital marketing, including e-commerce platforms, with a particular focus on curbing cartelisation and protecting consumers from fraud.
The government had imposed an 18% general sales tax (GST) in the budget for fiscal year 2025-26 on goods and services purchased online. Additional taxes are applied to non-filers and e-commerce platforms. Moreover, banks and payment intermediaries must keep buyers' data for quarterly reporting. Courier services will be penalised if they fail to collect taxes or comply with documentation standards of the Federal Board of Revenue (FBR).
The government has planned to regulate digital marketing and e-commerce platforms, after imposing sales taxes on online purchases.
Sources said that consultation was underway to introduce a bill in parliament to regulate online platforms, which would also help curb cartelisation. Recently, Temu, a Chinese e-commerce platform, came under the radar of the Competition Commission of Pakistan (CCP) over alleged misleading practices to distort the local market.
Temu entered the Pakistani market a few months ago with an aggressive digital advertising campaign, flooding platforms with promotional content. These ads, which promoted heavy discounts and risk-free purchases, quickly attracted consumers while putting local sellers at a disadvantage due to the scale and pricing Temu offered.
A coalition of independent retailers and sellers, the Chainstore Association of Pakistan, submitted a grievance application to the CCP, alleging that Temu's practices were anti-competitive and harmful to both consumers and domestic businesses.
"We write to alert the Competition Commission of Pakistan regarding growing anti-competitive market behaviour stemming from the influx of unregulated foreign e-commerce platforms such as Temu and Shein," it said.
The new law would also address such issues, sources said. Experts emphasise that Pakistan requires a comprehensive regulatory framework for its fast-growing digital marketing sector to tackle misleading advertisements. It also needs to ensure tax compliance and align with global best practices.
The proposed law is expected to cover truth-in-advertising rules, mandatory registration of agencies and influencers, data privacy safeguards and restrictions on deceptive marketing practices.
At present, digital marketing in Pakistan is being done on social media platforms like Facebook. It has been noticed that there were many misleading advertisements on such platforms about the sale of goods.
Payments are mainly made in 'cash-on-delivery' mode and consumers often receive wrong products compared to their orders. The Digital Bill will address these acts of fraud.
There has also been a surge in lending apps, prompting the Securities and Exchange Commission of Pakistan (SECP) to take action. These apps run misleading advertisements on Facebook to extract money from borrowers. The Digital Bill will deal with this challenge as well.
While citing the example of Amazon that displays accurate specifications of goods on its platform, experts stress that Pakistani e-commerce platforms should also mention clear specifications of goods they offer. These platforms must also ensure a clear display of prices, taxes, delivery timelines and refund policies, they said.
E-commerce sector seeks tax cut
Separately, the Pakistan eCommerce Association (PEA) urged the government to reduce the tax burden on the e-commerce sector and digital payments to provide a level playing field for online sellers and domestic shopping platforms as compared with foreign marketplaces.
"The imposition of additional taxes is negatively impacting the overall e-commerce ecosystem, including logistics companies, allied sectors and overall business activities," said Omer Mubeen, Chairman PEA, in a statement on Friday.
"The tax disparity is not only limiting the growth of local businesses but also forcing hundreds of small and medium enterprises (SMEs) and women entrepreneurs to shut down their operations," he added.
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