Tax on Amazon Seller (FBA) Income in Pakistan (TY 2025-26)
Amazon FBA seller tax in Pakistan TY 2025-26 - export goods regime, Section 154 bank WHT, US sales tax, sourcing costs, FBA fees, and slab vs final tax.
Worked example: Rs 300,000 per month
Annual income Rs 3,600,000 - here's how it would be taxed both ways under Finance Act 2025.
| Taxable income band | Rate | Income in band | Tax in band |
|---|---|---|---|
| Up to Rs 600,000 | 0% | Rs 600,000 | Rs 0 |
| Rs 600,001 – Rs 1,200,000 | 15% | Rs 600,000 | Rs 90,000 |
| Rs 1,200,001 – Rs 1,600,000 | 20% | Rs 400,000 | Rs 80,000 |
| Rs 1,600,001 – Rs 3,200,000 | 30% | Rs 1,600,000 | Rs 480,000 |
| Rs 3,200,001 – Rs 5,600,000 | 40% | Rs 400,000 | Rs 160,000 |
| Total slab tax | Rs 810,000 | ||
Pakistani Amazon FBA sellers and the export regime
When a Pakistani resident operates Amazon FBA (US, UK, UAE, or DE marketplace) and Amazon remits the net to your Pakistani bank account, the income is foreign-source export of goods. Section 154 export WHT applies - 1% (filer) / 2% (non-filer) - at bank realisation. The remittance you receive is already net of Amazon's referral fees, FBA storage and fulfilment charges, advertising spend, and any US/UK sales tax Amazon collected from buyers and remitted to local authorities.
Sourcing, customs, and the COGS trail
FBA sellers typically source from Alibaba or domestic Pakistani manufacturers and ship to Amazon's warehouses via freight forwarders. Every outward payment for inventory must be documented with a commercial invoice and a bank-channel transaction reference. FBR auditors disallow COGS claimed via informal hundi/hawala channels - pay through proper banking, retain bills of lading, and reconcile each shipment to a SKU and a downstream Amazon sales burst.
Amazon fees, PPC ad spend, and inventory write-downs
Deductible against business income: Amazon referral fees (15% typical), FBA fulfilment fees, monthly storage fees, long-term storage surcharges, Amazon PPC (Sponsored Products / Brands), removal/disposal fees on slow-moving inventory, return-handling fees, and translation/listing services. Inventory write-downs for damaged or expired stock are deductible when supported by Amazon's removal report or destruction confirmation.
Filing path: final tax vs slab election
Section 154 export WHT functions as final tax for individual exporters by default - simple but doesn't let you deduct the heavy FBA fees and PPC costs. High-margin FBA sellers often accept this. Low-margin or aggressive PPC sellers elect business-income treatment with full deductions instead, paying slab rates on the net. Compute both before filing - the gap can be enormous depending on your margin structure.
Frequently asked questions
Is Amazon FBA income taxable in Pakistan?
Yes. Amazon FBA remittances are foreign-source export of goods - Section 154 export WHT (1% filer / 2% non-filer) applies on bank realisation; generally final tax for individuals.
Does PSEB cover Amazon FBA sellers?
No. PSEB is restricted to IT and digital services exporters. Physical-goods FBA sellers fall under the regular Section 154 export-of-goods regime.
How do I prove Alibaba sourcing to FBR?
Use bank-channel outward remittances (not hundi/hawala), keep commercial invoices, bills of lading, and Amazon Removal Reports. Match each batch to a sales SKU.
Can I deduct Amazon PPC ad spend?
Yes - under business-income treatment with deductions. PPC, FBA fees, and storage costs are all legitimate expenses. Final-tax filers cannot claim these deductions.
Do I owe US tax as a Pakistani Amazon seller?
Generally no, under the Pakistan–USA DTAA, unless you have a US permanent establishment. Amazon may withhold on certain categories - submit a W-8BEN to claim treaty rates.