Pakistan to Impose 5% Tax on Social Media Income: National Assembly Committee Approves Proposal

The Standing Committee on Finance of the National Assembly has approved a key proposal to impose a withholding tax on income generated through social media platforms, marking a significant step toward formal taxation of digital earnings in Pakistan.

The decision will also impose a 5% withholding tax on the income generated by platforms like YouTube and other social media networks in relation to foreign earnings remitted to Pakistani bank accounts, as per Federal Board of Revenue officials.

Social Media Earnings in Pakistan Estimated at Rs 10 Billion

In the meeting, officials of the FBR told the members that the total income earned from social media is now estimated at around Rs 10 billion in Pakistan.

Officials also explained that if creators are paid foreign currency, they will be withheld of the tax when the money is transferred to their bank account, for example when they are paid in US dollars from YouTube.

5% Withholding Tax on Digital Content Creators

The new scheme will impose a 5% withholding tax on the income of social media influencers, YouTubers and digital content makers.

The measure targets the expanding tax base and formalisation of digital income sources, particularly in a context of a fast-growing online content sector in the country.

Export Sector Tax Relief Also Approved

In the same meeting, the committee also approved a separate proposal to abolish the 1% advance tax on exporters. Overall, the decision is likely to bring relief to the export sector and enhance competitiveness in global markets.

Digital Economy Under Formal Tax Framework

The transfer highlights Pakistan’s renewed attempts to regulate and tax the booming digital economy, including social media income from brand partnerships and YouTube monetization.

The move has the potential to benefit tax documentation for online earnings while potentially causing issues of compliance and lower income for independent digital creators, according to tax experts.