Many Pakistani online shoppers are wondering: Will the prices of AliExpress and Temu finally go down after the Federal Board of Revenue (FBR) suspended the recently introduced 5% tax on foreign digital goods and services?
On July 1, 2025, the FBR formally revoked the 5% Digital Presence Proceeds Tax through notification S.R.O. 1366(I)/2025, just weeks after its introduction in the federal budget. The decision took consumers and digital service providers by surprise.
The tax had been designed to target foreign companies with “significant digital presence” in Pakistan, those benefiting from Pakistani users but without a physical office. It mirrored Europe’s Digital Services Tax (DST), aiming to increase revenue from international e-commerce and tech platforms.
Under the tax policy, banks were directed to withhold 5% on cross-border payments, and customs officials were instructed to block delivery of imported parcels without proof of tax payment. This included everything from streaming and gaming subscriptions to cloud software and online product orders.
With the suspension in place, the following services are exempt:
- International streaming platforms and gaming apps
- Cloud storage, productivity tools, and SaaS platforms
- Physical and digital goods purchased from overseas e-commerce platforms
As per the S.R.O., no foreign-supplied digital goods or services will be taxed, even if they previously fell under the law’s scope. In theory, this should reduce costs for consumers and digital startups. However, the impact may not be immediate, since many platforms had not adjusted their pricing structure when the tax was first introduced. Some companies had simply absorbed the extra cost instead of passing it on to users.
Startups, freelancers, and software providers welcomed the move. “This exemption is a relief for small businesses that rely on global tools,” said Mr. Usman, a Lahore-based cloud services provider.
So, what about AliExpress and Temu?
Both platforms had quietly raised prices or included hidden fees to offset the 5% levy. With the tax now suspended, users hope for price drops, but it all depends on how these companies respond. If they remove the buffer costs added during the tax period, Pakistanis may soon see cheaper product prices and lower delivery surcharges on their next AliExpress or Temu orders.
For now, the FBR hasn’t ruled out future policy changes, so this tax-free window may only be temporary. Keep an eye on your billing summaries; your next order may finally cost less.