Federal Board of Revenue has intentions to impose a 33% tax on revenues that Google generates from Pakistan, reported Express Newspaper.
When and if implemented, Google — and other large networks such as Facebook, Daily Motion, Yahoo etc. — will have to pay a flat 33% of their revenues earned from Pakistan as taxes.
However, the mechanism for finding out the revenues of these companies earned from Pakistan is yet to be determined and authorities concerned are evaluating various options for this.
This is not the first time that FBR has shown such intents, in fact the board has discussed a similar option to include Google and other Internet publishers in tax-net during PPP government as well.
FBR think that if local publishers are paying money to Google (and other internet companies), then these companies are liable to pay taxes in Pakistan.
FBR said that Google, Facebook and all other large-scale web companies pay taxes in every country including India, UAE, Egypt etc. and similarly they are bound to pay taxes in Pakistan too.
FBR’s summary is to be moved to Finance Minister soon for a final verdict on the matter. If approved, government will go ahead with the plan to tax such internet companies that earn revenues from Pakistan.
According to estimates, Pakistani brands spent Rs. 25 billion for internet marketing during 2014, and a large chunk of this figure was collected by Google, Facebook, Daily Motion and Yahoo.
Local marketing agencies concur the idea of taxing these foreign internet companies, particularly when internet marketing spend in Pakistan is only going to increase during days to come.
For those who are not familiar, internet companies pay taxes based on buyers’ origins. For example if someone is buying marketing space on Google from USA, then tax is deducted and submitted to American authorities.
Similarly, if someone is buying adspace from Pakistan, these companies should pay taxes to Pakistani authorities, which they were avoiding till now.
Taxes on Pakistani Publishers
Such internet publishers who are making money through ad-revenues are also likely to be included in tax-net. One of the largest web-publishers in Pakistan was recently sent a notice to FBR to pay taxes for their ad-revenues, including those of adsense.
However, the matter is still to be discussed and finalized before a legislation is made on this.