What Is Affiliate Marketing (In Pakistan’s Context)?

Affiliate marketing is a performance-based model where you promote a product or service and earn a commission for each qualified sale, lead, or action generated through your unique link. In Pakistan, affiliates commonly use blogs, YouTube channels, TikTok, Facebook pages, email newsletters, and comparison sites to drive traffic to brands and e-commerce platforms.

Popular affiliate programs accessible from Pakistan include international networks (Amazon Associates, CJ, Impact, ShareASale, Rakuten Advertising) and regional marketplaces like Daraz. Pakistani affiliates also promote SaaS tools, hosting, fintech, travel, and education platforms that support cross-border payouts.

Key terms:

• Affiliate program/network: The platform that tracks clicks, conversions, and pays commissions.
• Publisher/affiliate: You, the marketer who promotes offers.
• Advertiser/merchant: The brand selling products or services.
• CPA/CPS/CPL: Cost per action/sale/lead—how you earn.
• Attribution/cookies: Technology used to credit your referrals.

Is Affiliate Marketing Legal in Pakistan?

Yes. There is no law in Pakistan that bans affiliate marketing. It is treated as a legitimate online business model within the country’s broader e-commerce and digital advertising ecosystem. However, it is regulated indirectly through laws on consumer protection, advertising, competition, taxation, cybercrime, contracts, payments, and intellectual property.

Practically, this means you can operate as an affiliate if you:

• Make honest, non-deceptive claims and clearly disclose affiliate relationships.
• Pay applicable taxes to the Federal Board of Revenue (FBR) and, where relevant, provincial revenue authorities.
• Use lawful payment channels approved by the State Bank of Pakistan (SBP).
• Respect platform/network policies and intellectual property rights.

Key Laws and Regulators You Should Know

Affiliate activity touches several legal areas. The following overview helps you map risk and compliance—consult a lawyer or tax practitioner for advice on your specific case.

1) Contracts and General Commerce

• Contract Act, 1872: Your agreements with networks and clients (including online terms of service) are contracts enforceable under Pakistani law.

2) Consumer Protection and Deceptive Marketing

• Competition Act, 2010 (Competition Commission of Pakistan – CCP): Prohibits deceptive marketing practices. Avoid misleading claims, fake reviews, undisclosed paid endorsements, or bait-and-switch tactics.
• Provincial Consumer Protection Acts (e.g., Punjab 2005, Sindh 2014, KP 1997, Balochistan 2003) and related rules: Require truthful information and provide remedies for unfair trade practices. If you sell or market to consumers, follow fair marketing principles.

3) Cyber and Online Conduct

• Prevention of Electronic Crimes Act (PECA), 2016: Addresses offences like fraud, identity theft, unauthorized access, and certain content violations. Don’t manipulate tracking, hack competitors, or engage in spammy/abusive conduct.

4) Intellectual Property

• Copyright Ordinance, 1962: Don’t copy product images, videos, or articles without permission.
• Trade Marks Ordinance, 2001: Avoid using brand names/logos in a way that confuses consumers or suggests you are the brand.

5) Company Law and Business Registration

• Companies Act, 2017 (SECP): If you incorporate, you must comply with corporate governance, filings, and reporting.
• You can also operate as a sole proprietor without SECP registration, but you still need an NTN and tax compliance.

6) Taxation

• Income Tax Ordinance, 2001 (FBR): Residents are taxed on worldwide income, including foreign affiliate commissions.
• Sales Tax on Services: Provinces (PRA, SRB, KPRA, BRA) may tax services; exports of services may be treated differently. Rules vary by province.

7) Payments, Foreign Exchange, and AML/CFT

• State Bank of Pakistan (SBP) foreign exchange framework: Use permitted channels (SWIFT bank transfers, Payoneer). Banks are not allowed to facilitate cryptocurrency transactions.
• Know Your Customer (KYC) and Anti-Money Laundering (AML) rules: Maintain clean records of the source of funds and invoices/agreements.

8) Advertising and Sector-Specific Rules

• Platform advertising policies (Meta, Google, YouTube, TikTok) apply to paid ads and organic promotion.
• Medical/health claims: Be careful—unsubstantiated health or drug claims can violate laws and platform policies. Reference approved sources and disclaimers.

Disclosure, Advertising, and Content Compliance

Transparent disclosure is a core principle of ethical affiliate marketing and aligns with Pakistani consumer protection and competition rules against deceptive practices.

How to disclose affiliate links

• Use clear, simple language near the link or at the top of your content. Avoid burying disclosures in footers only.
• Examples:
  • “This post contains affiliate links. If you buy through these links, I may earn a commission at no extra cost to you.”
  • “As an Amazon Associate, I earn from qualifying purchases.”
• In videos/reels: Verbally disclose + add on-screen text and include disclosure in the description.
• In social posts: Add a short disclosure at the start (e.g., “Affiliate link”) and not just hashtags.

Claims and reviews

• Substantiate claims with evidence; avoid superlatives like “best ever” unless based on verifiable comparisons.
• Don’t post fake reviews or fabricate testimonials.
• If you received a free product or sponsorship, disclose it clearly.

Email and messaging

• Use opt-in lists. Provide an easy unsubscribe option.
• Comply with platform and telecom rules for unsolicited messages; avoid spam.

Taxes: FBR, Provincial Sales Tax, and Record-Keeping

Affiliate earnings are taxable in Pakistan. Getting this right protects you from penalties and enhances your business credibility with banks and partners.

Income tax (FBR)

• Register with FBR and obtain your National Tax Number (NTN).
• File annual income tax returns and pay any tax due. Residents are taxed on worldwide income, including foreign affiliate commissions.
• Maintain books: invoices, payout statements (from Amazon, CJ, Impact, etc.), bank advice slips, and expense receipts (hosting, domain, ads, software).
• Foreign tax credit: If tax was withheld abroad, you may be able to claim a credit—consult a tax advisor.

Sales tax on services (provincial)

• Check your province’s rules (PRA—Punjab, SRB—Sindh, KPRA—Khyber Pakhtunkhwa, BRA—Balochistan). Some services provided to local clients may trigger sales tax registration and charging of sales tax.
• Exports of services (paid in foreign currency) may have different treatment. Documentation is key to claim export status.
• If you primarily promote foreign brands earning in foreign currency, discuss whether your activity is classified as export of services.

Practical tips

• Use a separate business bank account to simplify bookkeeping.
• Download monthly payout statements from networks and reconcile with bank credits.
• Keep track of ad spend and content costs to claim allowable expenses.
• Hire a tax practitioner familiar with digital businesses.

Business Setup: Sole Proprietor vs Company (SECP)

You can start as an individual (sole proprietor). As revenues scale, you may register a company for better banking access, brand trust, and potential client contracts.

Option A: Sole proprietor

• Get an NTN from FBR; register on IRIS.
• Open a bank account (business account recommended).
• Register for provincial sales tax on services if required by your province.

Option B: Company (Private Limited)

• Register with SECP, then get NTN and sales tax registrations where applicable.
• Follow corporate compliance (annual filings, audited accounts where required).

Regardless of structure, maintain invoices, contracts (including online terms), and KYC documents for payment processors.

Payments and Banking: Payoneer, Wire, PayPal, Crypto

Common payout methods used by Pakistani affiliates

• International bank transfers (SWIFT) to your Pakistani bank account.
• Payoneer: Widely used for networks that support it; can withdraw to local banks.
• Local marketplace payouts (e.g., Daraz to local bank accounts subject to their policies).

What about PayPal?

• PayPal does not operate in Pakistan. Some networks require PayPal; consider alternatives (Payoneer, wire) or choose programs that support your available methods.

Crypto payments

• Pakistani banks are not allowed to process cryptocurrency transactions. Avoid receiving affiliate payouts in crypto; use approved channels only.

Documentation

• Keep payout statements, bank advice slips, and any contracts/terms with the network for AML/KYC and tax purposes.

Platform and Network Rules (Amazon, Daraz, etc.)

Each affiliate network has strict policies. Violations can lead to termination and clawbacks.

Amazon Associates (and similar programs)

• Mandatory disclosure: “As an Amazon Associate, I earn from qualifying purchases.”
• Do not cloak links in a deceptive way; use approved link formats.
• No false or unverifiable claims; comply with product category restrictions (e.g., health).
• Don’t use Amazon images or trademarks beyond what is allowed in their Operating Agreement.

Regional marketplaces (e.g., Daraz Affiliate Program)

• Check payout thresholds, attribution windows, and allowed traffic sources.
• Follow content and ad policies for the marketplace and any ad platform (Meta/Google).

Ad platforms and social media

• Follow community standards and ad policies. Certain verticals (health, finance, adult) face stricter rules or bans.
• Disclose paid partnerships on platforms that support it (e.g., “Paid partnership” tags).

Privacy, Cookies, and Data Protection

Pakistan’s comprehensive data protection framework is evolving. Even without a finalized federal data protection law in force, you should implement basic privacy and data hygiene practices, especially if you collect emails, run analytics, or use tracking cookies.

Best practices for Pakistani affiliates

• Publish a Privacy Policy detailing what data you collect (analytics, cookies, email addresses) and how you use it.
• Use cookie notices and obtain consent where appropriate, particularly if serving EU/UK users (GDPR/UK GDPR) or other jurisdictions with strict laws.
• Secure data: use HTTPS, strong passwords, and reputable email/CRM providers.
• Honor unsubscribe requests promptly.

Risk, Red Flags, and Avoiding Scams

Keep your affiliate business clean by avoiding schemes that can trigger legal or financial trouble.

• Pyramid/Ponzi schemes: If earnings rely on recruiting others rather than genuine product sales, avoid it.
• Get-rich-quick promises: Be wary of any “guaranteed” high returns for minimal work.
• Incentivized clicks or fake traffic: Don’t use bots, click farms, or misleading giveaways to inflate numbers.
• Unlicensed financial/medical promotions: Extra caution with investment, loan, or medical offers; ensure the advertiser is licensed where required.
• Copyrighted content: Don’t scrape or re-upload others’ content without permission.

Quick Compliance Checklist

• Register with FBR and get your NTN.
• Assess provincial sales tax obligations (PRA/SRB/KPRA/BRA) for your services.
• Open a dedicated business bank account; set up Payoneer if needed.
• Create disclosure templates for posts, videos, and social captions.
• Publish Privacy Policy, Terms, and a Cookies notice on your site.
• Keep monthly records of payouts and expenses; reconcile bank statements.
• Comply with each network’s Operating Agreement and ad platform policies.
• Avoid crypto payouts; use SBP-approved channels.
• Consult a tax professional annually; file returns on time.

FAQs

Is affiliate marketing legal in Pakistan?

Yes. It is legal when you comply with existing laws on advertising, disclosure, taxation, consumer protection, payments, and online conduct.

Do I need a license to start?

No specific license is required. Start as a sole proprietor with an NTN. If you scale, consider company registration with SECP.

How do I receive payments?

Use Payoneer, SWIFT bank transfers, or local marketplace payouts where available. PayPal is not available in Pakistan. Avoid crypto.

Do I have to disclose affiliate links?

Yes, disclose clearly. It’s expected by consumer protection principles and required by most programs (e.g., Amazon Associates).

Are affiliate earnings taxable?

Yes. Register with FBR, file returns, and pay due tax. Provincial sales tax may apply depending on your services and where they are consumed.

Can students do affiliate marketing?

Yes. If you have taxable income, you must file returns. Keep proper records from day one.

What niches are risky?

High-risk niches include health/medical, finance/investment, and adult content. Follow strict claims policies and platform rules if you engage in them.

Conclusion

Affiliate marketing is a legitimate, legal path to building an online business in Pakistan. There is no single “affiliate law,” but you must respect a web of rules: avoid deceptive claims, disclose your relationships, pay taxes, protect consumer data, and use lawful payment channels. When you align with these requirements—and with network and platform policies—you can confidently grow a compliant, sustainable affiliate brand from Pakistan.

Next steps: register with FBR, set up compliant disclosures and privacy pages, choose networks that pay via approved channels, and keep excellent financial records. With the legal basics in place, you can focus on what matters most: creating valuable content, optimizing SEO, and serving your audience with trustworthy recommendations.