Once a hub for affordable imports, Temu and AliExpress now face soaring costs and shipping chaos under Pakistan’s new tax rules. Disrupting shipping, and leaving both consumers and small businesses in limbo.

E-commerce in Pakistan just got a lot more expensive. In a major move to boost revenue and tighten oversight of the digital economy, the government has introduced new taxes and customs restrictions that have directly impacted global e-commerce giants like Temu and AliExpress. The reforms, part of the Finance Bill 2025, include a 5% tax on foreign digital platforms and stricter rules for import shipments — causing prices to spike and services to be disrupted.

New Digital Tax Hits Foreign Platforms

The government has enforced the Digital Presence Proceeds Tax Act, requiring platforms such as Temu, AliExpress, Amazon, and Google to pay a 5% tax on proceeds from Pakistani users, even if these companies have no local offices.

Banks, e-wallets, and even couriers must now deduct this tax at the transaction stage and submit it to the Federal Board of Revenue (FBR). The move targets platforms that have earned millions from Pakistani users without paying local taxes.

In addition, the withholding tax on e-commerce payments including cash-on-delivery (COD) has been increased from 1% to 2%.

AliExpress Blocks Cheap Shipping to Pakistan

The situation intensified when Pakistan Customs banned popular low-cost shipping methods starting July 1. Platforms like AliExpress were forced to suspend affordable options such as Cainiao and AliExpress Standard Shipping, pushing sellers to more expensive routes.

By July 7, AliExpress had officially disabled budget shipping to Pakistan, leaving customers shocked. Some reported shipping fees as high as $52 for items worth less than $1.

Temu Raises Prices by 200–300%

Although Temu continues shipping to Pakistan via Speedaf, the platform has imposed steep price hikes in some cases by 200–300%. Industry insiders say this move is a preemptive buffer against unpredictable customs duties, as Pakistan has yet to issue clear category-wise tax guidelines. Without reliable cost projections, Temu has inflated prices to offset potential losses at the border. These adjustments are seen as temporary; once sufficient data from initial shipments reveals average taxation levels, the company is likely to recalibrate prices, potentially lowering them to more sustainable margins.

Backlash from Consumers and Sellers

The reaction from the public has been strong. Social media platforms are flooded with complaints, with many users calling the policies “anti-consumer” and warning that small online sellers could be wiped out.

“This hurts everyone from students who relied on affordable imports, to home-based sellers just trying to survive,” said one user on Reddit.

Industry groups have also raised concerns. The Pakistan E-Commerce Association has urged the government to reconsider the pace and clarity of the new regulations, warning that they risk pushing the sector back into informality.

 Economic Implications

With a revenue target of Rs. 14 trillion, including Rs. 623 billion from new taxes, the government is banking on aggressive fiscal measures to stabilize the economy. But the e-commerce sector growing at 35% annually and empowering over 100,000 small sellers is now at risk. Sudden price hikes, blocked shipping, and unclear customs policies are not just slowing growth; they’re threatening to push digital trade back into the informal, untaxed economy. What was once a driver of youth employment and small-scale entrepreneurship may now face stagnation unless policy is realigned with on-ground realities.

Conclusion

In trying to formalize and tax the digital economy, Pakistan has taken a bold but turbulent step. While the intent to generate revenue and regulate E-Commerce in Pakistan is clear, the execution has left consumers burdened, sellers uncertain, and international platforms cautious.

If left unaddressed, the current confusion and cost spikes could stall the country’s most promising economic frontier. To preserve the momentum of a growing E-Commerce in Pakistan, the government must now pivot — offering clearer policies, phased enforcement, and dialogue with stakeholders before the damage becomes long-term.

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