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August 9, 2020
MULTIMEDIA

AliExpress in Pakistan: Why Some Buyers Have To Pay Customs Duty And Others Do Not?

ali-express

Islamabad — Maryam remembers the first time she was asked to pay a customs fee on her online shopping delivery.

“I think it was in July last year,” the Islamabad-based entrepreneur says, as she jogs her memory for details of the incident from 2017.

Maryam recalls she was clueless about the additional charges. Since 2014, she had been ordering items — jewellery, clothes — from AliExpress, the China-based online retail service that connects Chinese small businesses to international buyers.

It had never happened before. Not once in three years had she been asked to pay a customs duty on a free delivery.

But on that summer day in 2017, the postman who delivered the shopping parcel also handed her a receipt and asked her to pay a customs fee if she wanted possession of the item.

“I had no idea that we had to pay customs for small packages, too,” Maryam says.

In the year since then, Maryam claims she has paid Rs. 55,000 as customs duties for AliExpress shopping items worth Rs. 70,000. That is nearly eight rupees of additional charges on every 10 rupees of shopping. It seems exorbitant by taxation standards, but Maryam says she has never challenged the customs fees.

“I actually don’t know how this works,” she says.

In August, Maryam posted a message on a closed Facebook group asking other group members if they knew why she was charged this customs duty. Her post received 90 comments. Several people shared experiences similar to Maryam’s in the comments thread. Others offered explanations. Many thought it was pure luck that some shoppers had not had to pay a customs duty. Yet more people felt the customs office was out to get bribes on international online shopping orders.

Through interviews with AliExpress customers in Pakistan and officials of the Pakistan Post and the Federal Board of Revenue (FBR), Media for Transparency was able to piece together a picture of the online shopping conundrum. Our investigation revealed a combination of negligence, capacity constraints, and lack of co-ordination between two government agencies.

The result is a confusing, non-transparent, and inconsistent practice of customs duty collection from the Pakistani customers of the AliExpress service. Many shopping packages do indeed slip through the cracks in the customs collection infrastructure, creating a “lucky” effect for the buyers. But the authorities also appear to be tightening the noose around online shopping items, and it is likely many more customers will find themselves facing the same situation as Maryam in the near future.

Pakistan’s Growing Online Shopping Market

Experts suggest the Pakistani e-commerce market is growing and is likely to hit $1 billion in sales by the end of 2018, according to news reports.

While most Pakistani online shoppers feel comfortable with local marketplaces that offer cash-on-delivery options, many consumers who can afford pre-payments with credit cards are looking towards international online marketplaces such as AliExpress. A State Bank quarterly report issued in 2018 claims Pakistani consumers made transactions worth Rs. 20.7 billion on international e-commerce websites.

AliExpress seems to have gained some popularity with urban online shoppers due to its free shipping option to Pakistan. It is, however, difficult to estimate the actual number of AliExpress customers in Pakistan.

ali-express-website

A screenshot of AliExpress, the online retail service owned by Chinese e-commerce giant Alibaba. The service is gaining popularity in Pakistan.

Media for Transparency submitted requests under the federal Right of Access to Information Act to Pakistan Post and the FBR – the two federal institutions involved in processing international shopping packages such as those sent through AliExpress. The requests asked the two agencies to provide the specific number of AliExpress parcels processed in recent years and the customs duty collected on these parcels.

The Pakistan Post responded to the information request by saying it did not maintain any such record. The FBR has not yet replied to the request.

Some aggregate numbers, however, are available in the public domain. For example, the Pakistan Post annual report for 2016-17 states that postal service received 52,683 insured and uninsured parcels from abroad via different mail delivery systems. The postal service earned around Rs. 4.8 million in commissions on the collection of customs duty and Rs. 4.1 million as commissions on collection of sales tax on these parcels from the FBR, according to the report.

The FBR only disaggregates customs duty collection by types of major import items, such as petroleum or vehicles, in its revenue year books. It is difficult to ascertain the share of international online shopping from the customs duty collection pie.

Nevertheless, the consumer base for international online shopping might increase in Pakistan, and for many of these customers, the process by which their shopping items are delivered to them is unclear.

From AliExpress to your Doorstep

The way online shopping works is now familiar to many Pakistanis. You visit an online store or marketplace (such as the locally operating Daraz.pk or the international AliExpress website), choose the product you want to buy, place an order, and share your payment details.

After payment processing, the seller (sometimes called the merchant or dealer) packs the product, and attaches a sales invoice to the package. The invoice mentions the seller and buyer addresses as well as the weight and the value of the item. The seller then dispatches it to the buyer’s address.

For AliExpress customers in Pakistan, the first stop for the package is an International Mailing Office (IMO) in the country. All international mail is first received by the IMO. There, mail collectors separate the letters from the parcels. The AliExpress packages are shifted to the parcels queue. The parcels are then passed to a customs office of the FBR housed inside the IMO.

The customs officers inspect whether the items in the parcels are subject to customs duty or not. They typically divide the parcels into two categories: gifts and shopping.

intl-mailAccording to an FBR customs collector, gifts are identified through the customs declaration receipts affixed to the parcels. These receipts usually declare that the items in the parcels are gifts of no commercial value. However, according to the customs collector, if the customs officer in the IMO believes that the actual value of the gift plus its postal insurance is more than Rs. 20,000, they consider the parcel to be subject to a customs duty.

Shopping packages are easier to identify because of the sales invoice, which usually states the seller or merchant’s name and address. The invoice also communicates the value of the shopping item to the customs officers.

The customs officers are allowed to open the packages but the Pakistan Post staff is not, according to the IMO officials. The customs officers can open the packages if they believe the declarations are untrue or to check if the packages contains prohibited items. Once a parcel is open, the officer can match the item to its declared value.

According to Section 25 of The Customs Act 1969, if a customs officer suspects that the declared value is untrue, the officer may match the item’s value with identical goods or similar goods being sold in Pakistan at commercial level or derive a value by calculating the material costs.

“We (the custom officers) can appreciate the real value and calculate the implying custom on that but we can never depreciate it,” says the customs collector, who wished to remain anonymous because the collector was not authorised to speak with the media.

Once the customs officers are certain about the item’s value, they apply the customs duty to it.

But a customs duty is not the only type of tax applied to goods subject to customs.

The Types of Tax on Imports

Goods subject to customs are charged with four types of tax. Chief among these is the customs duty, but there is also a sales tax, a regulatory duty (for imported items already available in Pakistan), and a withholding tax (deducted at source). There are also an additional sales tax and an additional customs duty, both of which are applied in special circumstances to discourage imports to Pakistan.

The percentage of each duty or tax is provided in an FBR tariff book, which is updated annually. The customs duty and other taxes are applied through a cumulative tax collection formula, according to the FBR customs collector. This means that each new tax is applied to the sum of the item’s value and the amount of the previous tax. For example, if a 2% customs duty is applied to an item worth Rs. 1000, the customs duty comes out to be Rs. 20. The next tax will be calculated out of Rs. 1,020 (Rs. 1,000 + Rs. 20), rather than the original item value of Rs. 1,000.

Once these taxes are calculated, the parcels are repackaged by Pakistan Post staff into their original packing and dispatched to the post distributor who writes the customs duty and other taxes as calculated by the customs officers on a Pakistan Post receipt and sends the parcels off for delivery. These charges are to be paid by the customer upon receipt.

Were you ever charged a customs duty on your AliExpress shopping delivery in Pakistan?

If the customer refuses to pay the customs duty, the postman takes the package back to the post office. If the package is not claimed within two months, it is sent to the regional customs office where it is put up for auction. In such cases, the buyers lose the payments they made to AliExpress.

“I cannot even return the items, in Pakistan or AliExpress as the portal claims it is not their responsibility to know about the customs (regulations) in Pakistan nor is there a way to do anything about it in Pakistan,” says Maryam, the Islamabad-based entrepreneur who has had to pay thousands in customs duties for her AliExpress shopping.

But not every disgruntled AliExpress customer follows Maryam’s non-confrontational approach.

Inconsistent Duty

Director International Postal Service Hafiz Shakil Ahmed Qureshi says his office is flooded with complaints from customers who challenge the customs duty on their international shopping parcels. Mr. Qureshi says he brought the issue up during a meeting between Pakistan Post and FBR officials.

“They said that these items are imports even if they are small packages and will be treated like other imports in the country,” Mr. Qureshi tells Media for Transparency.

He says no detailed explanation was provided by the FBR. But it is clear the AliExpress shopping packages are being considered as imports by the customs officials.

“By law, everyone who receives anything from abroad has to pay a customs duty. We noticed that not all packages were being custom screened and we are working on resolving that now.” – FBR customs collector

The customs collector who spoke with Media for Transparency on condition of anonymity says the workload of customs officers has increased because they are trying to apply customs to all shopping packages.

“People come and fight every day with the customs officers at the IMO, questioning the customs duty applied,” the collector says. “There is a lack of education about laws, every country has custom duties that are how we run the revenue.”

The FBR claims belie the reality. According to eight frequent AliExpress shoppers who spoke with Media for Transparency, not everyone has been charged customs duty for all the packages they received. So why is this discrepancy that only some AliExpress shoppers are charged a customs duty?

An official at the Pakistan Post Office says the postal service cannot say why all parcels are not charged because it is the job of the customs officers. The customs collector, familiar with the IMO, says FBR is not the custodian of the mail and the discrepancy arises in the way the international mail is sorted by the postal workers. The collector claims Pakistan Post does not hand over all the possible packages.

“It is their job to give us the parcels,” the customs collector says. “We are not the custodians of the packages hence it does not fall on us if packages aren’t charged, yet we are working on resolving the issue.”

If an AliExpress shopper has gotten away with customs duty for a shopping item, it is because the IMO made a mistake, the collector says.

“By law, everyone who receives anything from abroad has to pay a customs duty,” the collector says. “We noticed that not all packages were being custom screened and we are working on resolving that now.”

Outmoded Receipts

Maryam also finds the authenticity of the Pakistan Post receipts questionable.

“I, of course, do not like paying Rs. 1,500 for an item that cost me 90 rupees,” she says. “The receipt has no information as to how and why I was charged double or triple the mentioned cost.”

She says she only shops for random items and does not make bulk purchase from AliExpress.

“I find it unfair,” Maryam says.

She calls the receipts “scribbled handwritten parchi(s)” and that is a fair characterisation.

Media for Transparency witnessed around 20 receipts where AliExpress customers in Pakistan were charged some dues under a “Refugee Tax” head.

post-receipt

A Pakistan Post receipt attached to an AliExpress shopping package delivered in Pakistan. The receipt clearly shows a fee listed against the obsolete Refugee Tax.

Even the customs collector Media for Transparency spoke with was surprised to see the Pakistan Post receipt attached to AliExpress packages that have been charged customs duties.

“We give them the rates under the customs duty labels,” the customs collector says. “I do not know when this receipt was printed because the refugee tax does not even exist anymore.”

customs-duty

Customs officers use the above-mentioned categories to charge dues on online shopping parcels. Source: Hafiz Shakil Ahmed Qureshi, Pakistan Post.

Mr. Qureshi, the Director International Postal Service, says he will look into the matter and get new receipts printed.

“These were printed years ago,” he says. “It is the right of our customers to know what they pay for.”

 

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Latest comments

  • Very nice article very informative.

  • Very well reaserched and written.

    • I was not being charged custom duty but recently the postman came to my house and asked for 100 RS from my phupho. Who is almost 70 years old. When I went outside with rage and confronted the postman. He had a receipt of customs duty for 30 RS. I insulted him and told him you are earning Haraam and after 5 minutes of talking to him. He put his head down with shame and said he was doing wrong. Where can I report these incidents? I have his name and number but I do not want him to loose his job.

  • Got alot of information . Our society need such type of parcels more.

  • If I’m shopping something for myself then why the F**K they charge me sales tax and additional sales tax. collector was saying that law is for everyone, then they should mention (for an importer who is importing for selling purpose and a person who is importing something for household) any law for this. when you are talking about any F***ing law then you should give us a solid reason

    • I wonder the same thing. I collect CDs/DVDs so I shop online alot. And these are expensive already coz I have to pay withholding tax + card transaction fee etc already. And this rubbish custom duty as well, though the item are for my personal use. Seriously these old men at these organisations are so sick. They can’t understand the difference between personal & commercial usage.

  • Why these big sources not make the arrangement s of countries coustoms. Please see the despatched receipts of developed countries. Warehouse to doorsteps cod basis receipts commonly issued. No hassle ness zero risk.

    Taxes duties i heat these things, “PAISEY LO AIK DAFA DARWAZAY PER OR JAAN CHORO”

  • Great article. Answers most queries regarding custom duties from imports through AliExpress.

  • Can you advise, it is whose responsibility to re-pack the bag once opened by the customs officer at the airport on suspecion of any contra banned items BUT not find any such contrabanned.

    Please give the referenced clause in the custom act.

    Thanks for your kind advice.

    Regards
    Saleem

  • I am importing material which is 20 $ in worth and quantity is 100g. What will be the additional taxes that i have to pay when i received package through pakistan post ?

  • I want to buy a phone from Ali express its cost is 10500 approx now how much tax i have to pay for this phone??
    and is there any jugar to avoid the tax if any???
    plz do let me know
    ukj4@hotmail.com

    • Well well I’m not the only one
      Last year my sister ordered some cosmetics worth 13000 Rs during the sale season. It arrived with price of 13000 Rs+ 26000Rs extra?! Upon inquiring they broke down the extra charges which included
      1. all the duties and customs
      2.the price they thought it’s worth totally disregarding the sale season perk
      3. They receipt was in dollars so they taxed the current dollar price instead of the price of dollar during purchase which unluckily fluctuated by 30 rupees during the delivery period.
      4. Now here come the best one… 12000Rs repaking fee plus 2000 delivery fee from multan to bahawalpur. Seriously WTH the american based company made packed and delivered it to multan for 13000Rs and customs repackaged and delivered it for 14000Rs extra…?

      I think we can give some benefit of the doubt to first three but I don’t understand what law the forth falls under .. let me know if someone can make sense of this because the people over at citizen portal are also good for nothing.. trust me I tried that too.
      And yes I refused to pay these ridiculous charges so ended up with no product no refund because they didn’t send it back. As far as I can guess they are being used by the some custom officer’s wife or ‘auctioned’ labelled American made cosmetics for double the price.
      I guess here following the law means getting ripped by officials and still they complain we are not getting enough revenue.
      In case of any questions I have the signed receipt from the customs officer who also introduced himself and his designation on the phone.

  • Thanks for such Informative article, However i need to know that do we need to pay sales tax if we buy a single item for our personal use only, my example is, i have ordered a single wrench from ali express because thats no where available in Pakistan and it was really cheap on ali express. Now when the item arrives they put 35% custom duty on item value and then 17% sales tax and on the top of it they summed the shipping charges with item value to even make tax more higher. Does an individual person needs to pay sales tax? And normally shipment cost is the cost of service paid to postal company should it be added up with items value for calculating customs duty?

    Thanks so much!

    • this is the main reason you have to pay custom because when you buy from your home country the shopkeeper have to pay sales tax which government collect and improve their tax system. but other all charges which i read in other comments its just unbearable. i just can say about Europe for more details you can read my comment.

  • AH the Pakistani bureaucracy ! Creating hurdles in the way of innocent Pakistanis and preventing this country from adjusting to the 21st century. Ah the Pakistani bureaucracy !

  • there is nothing going to be changed in this country. I ordered an old days sega game console from aliexpress whose actual value was about 28 or 29. declared value on the parcel was 15$. the custom inspector found that it’s real invoice on aliexpress is more than 25. okay now here the game begins. he imposed every fking tax on that old game console. custom duty was 20% officially. he imposed sales tax, custom duty, refugee tax, clearance tax and packing tax too. he made a bill of 3277 and asked me to pay. i refused to pay because that was almost equal to the value of my order. i thought they will obviously return it as it happens in every country if you refuse to accept it is returned to the sender but no my friend this is Pakistan. i went back to customs office they said this is now customs property we will not return it to sender. i mean WTF man. why are you seizing people’s products? was it an illegal product ofcourse not. they said we seize every product which is not delivered or unpaid. it is our right. God blast Pakistan Customs.

  • it is like they intentionally create hurdles and make everything increasingly inconvenient…
    yyou cant shop online in peace,
    no drones,
    no 3d printers..
    no basant….
    just do drugs, and cat call and drink… thats what they want from us….

    and now we have a ventilator crisis which could have been resolved easily if we had 3d printers available… but the govt and the bureaucracy them selves are stone age,… they want Pakistan to remain and die in stoneage as well… no wonder people strive to get out of the country …. no wonder we have a brain drain….

    goodluck…

  • Your Pakistan customs is corrupt. They charged 92% of the declared value for gifts I sent to my husband. We are unable to afford this. Is there anyway to dispute? These people are criminals. I can’t stand them.

    • Yestersya I received a parcel and parcel value is 5$ and weight is 190gm.
      And Pakistani value his parcel is 700
      In this parcel normal jewelry only 15 items.
      And custom charge is 968 even they charge more then value.
      Even its not upload option so I can upload my custom slip.

  • I ordered a few items once and was out of Pakistan when I came back got most of my things I ordered but 2 pair of earphones I ordered went missing never received it, and another time I ordered a phone value of 23000 pkr had to pay 7000 pkr for custom making it cost 30000 for me and now I have ordered a microphone and it’s stuck in customs for 4 freaking months due to covid 19 I mean really how slow can it be and when will Pakistan match other countries standards

  • i am living last 10 years in Greece and have a lot of experience for online shopping and i know very clearly the process of custom duties and all extra fees here in Greece. recently i started an online shopping website ( http://www.yourskyshop.net ) to facilitate Pakistani people to reach the European market as well as international. my basic reason to start this website is to link Pakistani buyer to the international market so they can up to date with new products as soon as they introduce in international market without the hassle of Credit cards or PayPal. Also i committed to promote made in Pakistan products. i want to facilitate Pakistani small business, Entrepreneur & handy crafts. they can sale with my website in international market on very good prices without the fear of advertisement and/or how they get in international market. Today one customer asked me for duty charges in Pakistan and i said him to ask Pakistani official but he said there is no clearance about any charges (he not find any specific answer). after i start search by myself and end up here and as much answers i read i just speechless how brutally our Pakistani officials behave against international parcels. let i will tell you how in Europe this process work.(they just collect customs which products came from out of European Union. within Europe you can buy fearless any amount of product ) first of all there is a difference between importer and personal consumer if you bought for your personal use they never charge you as importer. it happened because here everyone registered with tax department and they know who is importer or not. but again let say 2 to 5 % people make black orders which not a big number when government collect 95 % of tax. Second they charge you custom on most of electronic products which cost more then 20 Euro as labeled on parcel. if they assume maybe its worth more than what written on parcel then they hold your parcel for custom check. (but most they consider as written on parcel if its Chinese or other brand which not available in local market so they can’t compare price with their local market and they consider as written on parcel ) in this case (assume ) let say 30% of parcels they hold. Most of house hold products clothes, shoes, baby products e.t.c they not charge customs. now i will tell you how they calculate customs. for example i bought 100 euro mobile they will hold in custom and send me a written letter to provide a purchase slip via email or fax. i provide them via email my purchase slip after they calculate sales tax in Greece which is now 24% + they have 12 Euro standard custom process fee weather parcel cost 10 euro or 1000 euro they charge standard 12 euro fee. if i fail to provide purchase slip then they will calculate the price with similar product in market. at the end i get package with 24 euro sales tax + 12 euro custom with holding fee which is total 36 euro i have to pay for 100 euro purchase which is again fair charges because here product on shop is bit more expensive because of their business expenses. If in any case they charged you more then your parcel worth and you refuse to take then they responsible to send back and you will got your refund without any fear. Also here never need to activate your any mobile which you bought from any international market. In Pakistan yet you have to bear PTA activation charges. which i never understand we are living in 2020 and they have to make process to activate my phone and not try to facilitate people in other ways. i really feel sorry how we far from other world in this fast age. I just hope some day maybe things change for Pakistan. If you want any information against Buy or Sell internationally you can write me on ” support@yourskyshop.net ” Wish everyone good luck for their desires…..

  • If you like to pay zero custom duty on AliExpress items follow the following steps.

    1. Track package on AliExpress app till the time it is received by IMO.
    2. Next day early morning, visit customs office in your city’s IMO.
    3. Talk nicely to custom officers, tell them that you don’t have enough money to pay full custom duty please find a solution for me. (mukmaka kur loo – but don’t mention that you are paying any bribe).
    4. Once custom staff realize that you are in need and they can earn quick bucks by acting in humanitarian fashion. They will ask for half the custom duty in return for cooperation.
    5. Make a very sad frustrating face as if you are about to cry and insist for lesser amount.
    6. They will settle for some amount between 30 to 50% of the original custom duty.
    7. Pay them cash and come home.
    8. Next day a postman will come to your house and deliver the package and will not ask you for any money other RS 50 delivery charges.

    9. Important Note: At any point during this process do not show any signs of anger or annoyance. Make custom officers feel like as if they are doing you a big favor and helping you. If you mess up this important step, you should better forget your current parcel and also any future parcels.

    You will be successful!
    This a time tested method. I have personally used it numerous times.

    Note to frequent buyers
    Make relationship with custom officers. Then you will be able to get your item cleared just by calling and pay the money through Easy Paisa.

    If you have very good relations with custom officials. They will not charge anything for small packages (under $20 – personal experience) .

    You are welcome.
    Long live Pakistan.

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