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Online shoppers in Pakistan are feeling the pinch after the imposition of 5% digital tax on all purchases from international vendors this month, reports WealthPK.

This new tax measure, outlined in Budget 2025-26, has forced international vendors like AliExpress and Temu to scale back their operations in Pakistan. At the same time, the Pakistan Customs has blocked low-cost shipping options such as AliExpress Standard Shipping and Cainiao, leading to a sharp rise in delivery charges.

The budget has introduced a tiered tax structure for local e-commerce platforms and expanded the scope of taxation to include foreign digital vendors providing goods or services in Pakistan. The government now defines e-commerce as any transaction carried out through websites, apps, or digital marketplaces. As a result, the prices of online goods, especially electronics, accessories, and household items, have increased significantly.

Foreign platforms like AliExpress and Temu have started downsizing their operations in Pakistan due to the lack of clarity in new customs requirements and rising logistics costs. The sellers are now forced to use more expensive shipping services, making formerly cheap cross-border shopping less attractive to Pakistani consumers.

Tariq Mehmood, an e-commerce seller based in Karachi and a member of the E-commerce Club Pakistan, said the new rules have created confusion and discouraged small-scale traders. “Many of us rely on affordable shipping channels to sell low-cost items. With those options blocked, it’s becoming difficult to maintain profit margins,” he explained.

Tariq added that many customers are backing out of orders due to the sudden price hikes caused by the high shipping costs and added tax. Another industry voice, Sumbal Asif, who works at a Lahore-based logistics company that deals with e-commerce deliveries, shared that the ban on cheaper delivery channels has increased operational pressure.

“We are getting more complaints about delays and expensive shipping rates. The customers are frustrated because they are used to free or low-cost delivery from platforms like AliExpress. Now, even basic items are becoming unaffordable,” she said. Many experts agree that while taxation is necessary for formalizing the digital economy, the sudden changes without proper infrastructure or communication hurt both businesses and consumers.

Industry players advocate for better coordination among the Pakistan Customs, the Federal Board of Revenue (FBR), and e-commerce stakeholders to create a system that encourages digital trade without overburdening end-users. Currently, digital shopping in Pakistan is experiencing a slowdown. The trend may continue unless more balanced policies are introduced.

Credit: INP-WealthPk