Following the recently passed budget, Pakistan has seen a dramatic increase in the prices of products on online marketplaces such as Temu and AliExpress.
Pakistani internet users have recently noted that pricing on platforms have skyrocketed, with some things now costing three to four times as much as they used to.
However, newly imposed taxes are not the only reason for the three to four times price hike.
This is what transpired.
In essence, the Digital Presence Proceeds Tax Act, which was adopted by the Pakistani government, levies a 5 percent tax on foreign-made items sold in Pakistan.
Furthermore, like other firms in Pakistan, these online platforms or shopping stores would be required to pay 18 percent sales tax in addition to the 5 percent tax.
For example, if a manufacturer in Pakistan sells a product, he must pay 18 percent sales tax and 35 percent income tax. Foreign businesses, such as Temu and AliExpress, sell goods in Pakistan without paying taxes, but this is about to change.
Are taxes to blame for the price increases of up to 300%?
No, the taxes included in the budget cannot cause the prices of goods sold on Temu and other websites to rise by 300 percent. The most plausible explanation is that Temu purposefully raised the prices to guard against any unidentified taxes or tariffs.
Additionally, if these taxes are clarified, there’s a chance that costs will drop in the upcoming weeks.
