In order to encourage the development of local industries in Pakistan, the Pakistani government decided this year to apply a 5% sales tax rate to local products and increase the tax rate to 17% for imported products. This move has resulted in many products including leather goods, footwear, and clothing. Prices of imported products increased.
Industry insiders believe that Pakistan applies different sales tax rates based on origin, which will hinder the introduction of international brands and even promote the increase in illegal activities such as smuggling, under-invoicing, and false customs declarations in the country.
