ISLAMABAD (Kashmir English): The Federal Board of Revenue (FBR) has introduced a new mechanism to tax the income of social media creators, using a benchmark of PKR 195 ($0.71) in earnings per 1,000 YouTube views.
The objective of this new benchmark is to bring the rapidly expanding digital economy into the formal tax system.
Under this new system, only revenue-generating social media content will fall within the tax net; the method will not apply to non-profit content that merely garners views.
A notification issued by the FBR states that individuals earning income from social media may deduct up to 30 percent of their earnings to account for expenses.
Officials stated that the benchmark for YouTube has been set at PKR 195 per 1,000 views. To calculate the tax, this figure is multiplied by the number obtained after dividing the total views by 1,000.
However, if the actual income generated from the content is lower than the set benchmark, the creator can substantiate their actual earnings by presenting relevant documentation.
According to officials, such documentation may include revenue reports from YouTube or other platforms, payment records reconciling with bank receipts, tax deduction certificates, advertising contracts, and invoices.
Tax officials may also, under relevant legal authority, request access to the creator’s social media account records regarding income. Under the new procedure, income will not be limited to cash receipts; goods and gifts received free of charge in exchange for content will also be counted as income.
Authorities have advised content creators to maintain records such as platform income reports, payment records, bank statements, and documentation confirming the absence of sponsorship or advertising agreements as evidence regarding their content.
According to the FBR, the new procedure does not prescribe a separate tax rate; instead, the applicable tax will be collected under the relevant provisions of Pakistan’s Income Tax Ordinance.
Individuals earning income from social media will be required to pay advance income tax on a quarterly basis and must declare this income in the designated section of their annual income tax return.
If the declared income falls below the threshold established under the new procedure, the relevant tax officer may revise the return and collect the outstanding tax amount.
The new procedure applies to individuals residing in Pakistan who generate income through social media platforms based on their engagement with users within the country. According to authorities, there is no minimum user-count requirement for resident individuals, whereas a specific threshold has been set for non-residents.
Non-resident individuals will fall under this system if, during a tax year, their user base in Pakistan exceeds 50,000, or if it exceeds 12,250 in any single quarter.
