The International Monetary Fund has proposed that online platforms involded in transactions in Pakistan should be brought into the revenue stream by application of general sales tax and value added tax.

According to a report by Business Recorder, IMF’s recommendation is based on digital platforms ‘that control key elements of the transactions with consumers’.

Taxes would be applied to digital products and services as well as sales by non-resident vendors to local consumers.

This includes not just businesses who use online platforms for the sale of their products to people and businesses but also intermediaries that has input or share in transactions and sets conditions for it. These platforms also include those that supply products from third-party vendors to customers but have a stake in the transaction.

“The digital platform would include a person that is involved, directly or through arrangements with third parties, in collecting, receiving, or charging payment for the sale and transmitting payment to the third-party vendor,” Business Recorder reported.

However, the tax will not be applied to online platforms that simply allow vendors and services to list their services as advertisements. Sources said that these platforms would be exempt as they are not involved in transactions.

IMF has also recommended that any transactions with digital products of services by government or services by government departments by non-resident sellers should also be taxed as business to business transactions.

The report comes a day after the IMF announced that a staff-level agreement has been reached with Pakistan over the final review of the stand-by agreement to unlock the remaining $1.1 billion.

Although the Fund has not outlined details of its interactions with the government, sources said that many new taxes including those on real estate could be in the offing.