Punjab Revenue Authority has been making efforts to bring internet giants in its tax net and had previously issued notices to Facebook, Google, DailyMotion for getting themselves registered in Lahore and pay taxes for the revenues they make out of Punjab.
Facebook, surprisingly, sent a reply to the PRA via a letter and said:
Registration with the PRA is not applicable to us as we aren’t taxable in the country. We are providing our online services from Ireland from where the multinational corporation is operating.
On the other hand, according to PRA act, advertisers — those Pakistani individuals and businesses that advertise through Facebook — are liable to sales tax. A section of PRA Act says:
Where a taxable service originates from outside Pakistan but is received or terminates in the Punjab, the recipient of such service shall be liable to pay the tax to the government.
PRA is essentially looking for a way to tax Pakistanis who advertise on Facebook, however, they can’t know the advertisers without Facebook’s help.
Facebook, while playing tactfully, is not even close to helping PRA as it doesn’t want to increase the cost of advertising on its platform by exposing advertisers’ list as by doing so the ad spend on its website will decrease.
Punjab Revenue Authority, in this situation, can do “Compulsory Registration” of such companies — including Facebook, Google, DailyMotion etc. — after which legal action can be taken against these companies.
PRA, under the legal cover, can approach Pakistan Telecommunication Authority and get these websites blocked in Pakistan for not paying taxes.
PRA has said that its legal wing is considering all possible options to get these websites with-in the tax net.
Via The News