Prices of products on online marketplaces like Temu and AliExpress have surged sharply in Pakistan following the recently passed budget.
Internet users in Pakistan have pointed out in recent days that prices have soared dramatically on these platforms, with some items reportedly costing three to four times more than before.
However, the three to four times price increase is not due to recently introduced taxes alone.
So, basically the government of Pakistan has introduced a Digital Presence Proceeds Tax Act, under which a 5 percent tax has been imposed on goods sold in Pakistan from abroad.
Moreover, in addition to the 5 percent tax, these online platforms or shopping stores will also have to pay an 18 percent sales tax, just like other businesses in Pakistan do.
To put it into perspective, a manufacturer in Pakistan pays 18 percent sales tax along with 35 percent income tax if he sells a product. However, foreign companies like Temu, AliExpress etc., sell products in Pakistan without paying any taxes, something which will change now.
No, the taxes introduced in the budget can’t result in a 300 percent increase in prices of products listed on websites like Temu. The more likely scenario is that Temu has deliberately increased the prices as a precaution to avoid any unspecified taxes or duties.
A Temu spokesperson attributed the price changes to recent policy shifts and rising operational costs. “The prices of some products may have changed due to recent changes in external policies and rising operational costs across various areas. We remain committed to providing access to quality products at affordable prices, while fully complying with local requirements,” he said.
And there’s a likelihood that the prices will come down in the coming weeks once there is more clarity on these taxes.
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