The government of Pakistan has introduced a new digital tax law in the budget 2025 on social media earnings.
Incomes generated from YouTube and other social media platforms will now be taxable. The legislation also applies to telemedicine, e-learning platforms, cloud services, and online banking in Pakistan.
Furthermore, e-commerce websites, online stores, and digital marketing platforms also fall under the ambit of the new tax regulation. Banks and exchange companies involved in transferring payments to foreign companies in exchange for goods or services will be required to deduct a 5 percent tax.
Taxes must be submitted to the account of Pakistan’s National Treasury by the 7th of each month. Failure to deduct the text or submit to the account may result, will result in legal action against the concerned financial institution.
The new legislation requires all social media platforms working in Pakistan to submit a quarterly report to the Government of Pakistan.
Read more: Rajab Butt nominated in FIR of sexually assaulting an activist
Similarly, any institution responsible for processing foreign purchases must submit a detailed quarterly report that includes the buyer’s name, national identity card number, date of payment, and the amount involved.
A penalty of Rs 1 million will be imposed in case of failing to submit a quarterly report to the government. Additionally, if a foreign company fails to comply with the tax payments for three consecutive months, the bank transfer to that entity will be cancelled.
The bill has also proposed regulations for online vendors to bring them into the tax net. “Every online marketplace or courier service … shall not allow any vendor to use its platform services to carry out e-commerce transactions unless such vendors have been registered under the Sales Tax Act, 1990 (VII of 1990) and this Ordinance.”
As per the proposed law, every foreign vendor who pays “social media platforms or any other online platform for online advertisement in Pakistan” will pay 5pc of the amount paid to social media platforms.