Impact of New Taxes and Shipping Restrictions on Pakistani E-commerce
The e-commerce landscape in Pakistan is undergoing significant changes, with new taxes and shipping restrictions affecting both consumers and sellers. As of July this year, a 5 percent digital tax has been imposed on all foreign online purchases, leading to a noticeable increase in the prices of imported goods. This move by the federal government is part of the annual budget 2025-26, which introduces additional taxes on both local and foreign e-commerce marketplaces, making online shopping more expensive for consumers.
Under the new law, e-commerce is defined as “the sale or purchase of goods and services” through websites, mobile applications, or online marketplaces. This broad definition ensures that all forms of digital transactions are subject to taxation. The tax rates vary depending on the nature of the transaction. For instance, e-commerce businesses will now face taxes ranging from 0.25 percent to 5 percent. Foreign vendors with a digital presence in Pakistan will be charged a 5 percent tax on digitally ordered goods and services, regardless of whether they are delivered digitally or physically.
On the local front, the government has proposed a tiered tax structure for transactions on domestic e-commerce platforms. A 1 percent tax will apply to transactions where the amount does not exceed Rs10,000. For transactions under Rs25,000, a 2% tax will be imposed, while any amount above Rs25,000 will be taxed at a reduced rate of 0.25 percent. This tiered approach aims to balance the burden on smaller transactions while still generating revenue from larger ones.
In addition to the new taxes, Pakistani customs have also taken steps to restrict access to cheaper shipping options. Platforms like AliExpress Standard Shipping and Cainiao have been banned, forcing sellers to rely on more expensive logistics solutions. This shift has resulted in significantly higher prices for Pakistani buyers, as the cost of shipping is passed on to consumers.
Temu, another popular platform, has also experienced the effects of these changes. AliExpress has halted several shipping options to Pakistan following new customs tax reforms that have blocked access to cheaper cross-border delivery routes. These regulatory actions by Pakistani and Sri Lankan customs authorities are expected to disrupt e-commerce activity significantly.
AliExpress has informed sellers that it has started offline processing for destination routes including Pakistan and Sri Lanka, citing the lack of clarity around new tax requirements. While specific details of the customs changes remain undisclosed, the impact is already being felt on the ground. This move seems to be part of a broader crackdown by Pakistani customs on heavily discounted shipping services, such as AliExpress Standard Shipping and Cainiao, which have long made Chinese e-shopping websites attractive to Pakistani consumers.
These services allowed consumers to purchase electronics, accessories, and household goods for just a few dollars with little to no shipping fees. However, this era of affordable online shopping appears to be coming to an end, as the new regulations and restrictions take effect. The combination of increased taxes and limited shipping options is reshaping the e-commerce environment in Pakistan, with far-reaching implications for both buyers and sellers.
