Pakistan Introduces Taxes on Foreign E-commerce Giants to Support Local Retailers

Pakistan’s retailers are welcoming the new taxes imposed on international e-commerce giants like Temu, Shein, and AliExpress. Local retailers claim that these foreign firms have been operating in the country without paying taxes, giving them an unfair advantage over domestic businesses.

The new tax measures, introduced through the federal budget on June 26, include an 18% sales tax on goods delivered by courier companies for foreign platforms, a 5% fixed income tax on digital retailers, and a reduction in the duty-free threshold for imported parcels.

The tax regime came into effect on July 1. The move is seen as a positive step by the government to bring international platforms into the tax net, according to Malik Asim Dogar, secretary-general of the Chainstore Association of Pakistan (CAP).

The policy aims to ease the burden on domestic retailers, prevent the influx of substandard goods, and help the government raise tax revenue. The tax collection target for this fiscal year is over Rs14 trillion ($49.3 billion) to meet IMF loan program targets.

Foreign e-commerce platforms had been selling directly to Pakistani consumers without being subject to local tax laws, putting formal retail chains at a disadvantage. Daily parcel volumes from foreign platforms have surged, affecting local sellers of various products.

The new taxes are expected to level the playing field for domestic retailers, addressing a long-standing complaint. However, concerns remain about the enforcement and implementation of these tax measures.

Despite the challenges, the growing Internet penetration in Pakistan is fueling e-commerce, with retailers gradually shifting to digital platforms.

According to the source: Arab News.