Local E-Commerce Companies Slam Tax Breaks for Temu, SHEIN, AliExpress

The Pakistan eCommerce Association (PEA) has urged the government to reduce the tax burden on the local e-commerce sector and digital payments to provide a level playing field for online sellers and domestic shopping platforms as compared with foreign marketplaces. The imposition of additional government taxes is negatively impacting the overall e-commerce ecosystem, including logistics companies, allied sectors, and overall business activities as a whole, said PEA Chairman Omer Mubeen. “The tax disparity is not only limiting the growth of local businesses but is also forcing hundreds of small and medium enterprises (SMEs) and women entrepreneurs to shut down,” he added. The association has called on the government to provide tax relief to the e-commerce sector, pointing out that major local companies are already paying substantial amounts in income and sales taxes. “The increase in taxes will not only reduce the competitiveness of local players but will also hurt the sales of domestic e-commerce companies,” Mubeen said. In the 2025–26 federal budget, the government had levied new taxes on indigenous e-commerce companies at different rates, such as 18 percent GST and 0.25 percent to 2 percent cash-on-delivery and digital payment taxes. The government, in a similar vein, had levied a 5 percent flat rate tax on international online platforms like Temu, AliExpress, and SHEIN, but subsequently withdrawn it. On the other hand, taxes were maintained on indigenous e-commerce platforms. Shoaib Bhatti, President of the Pakistan eCommerce Association – Karachi Chapter, said the removal of taxes on foreign e-commerce platforms will continue to cause an outflow of foreign exchange from the country, whereas domestic e-commerce companies generate business activity and create employment opportunities within the local economy. “At a time when Pakistan needs to expand its digital economy and create opportunities for its youth, these regressive tax policies will only push entrepreneurs out of business. We strongly urge the government to ensure a level playing field for all segments of the economy—both COD and digital—instead of discouraging online entrepreneurship,” he added. According to industry estimates, there are over 12,000 major e-commerce players and more than 200,000 small and medium-sized operators doing business in Pakistan, providing direct or indirect employment to over 500,000 people. Pakistan’s e-commerce industry has been growing at an average annual rate of 20–25 percent and is currently valued at approximately $7 billion (FY24), according to official market data. Nearly 70 percent of this ecosystem is driven by SMEs, which rely heavily on affordable digital tools and logistics to sustain operations.