Pakistan is moving to tax social media earnings from platforms such as YouTube, TikTok, and Instagram, as authorities widen their effort to document digital earnings and raise revenue from online activity.
The Federal Board of Revenue (FBR) has proposed a special procedure for imposing 5% withholding tax on income from remunerative social media content. The proposed rules would cover creators who earn money through user engagement, audience reach, advertising, sponsorships, or other forms of monetisation.
Up to 30% of Revenue
Under the draft rules, the minimum income of a social media creator would be calculated after deducting expenses from total remuneration. The deductible expenses would be allowed up to a maximum of 30% of total revenue.
In simple terms, if a creator earns Rs. 1 million from social media content, the maximum expense adjustment allowed under the draft rules would be Rs. 300,000.
The total remuneration would be taken as the higher of two amounts: the income estimated through a revenue-per-mille formula based on views and posts, or the actual amount received by the creator in cash or kind.
For calculation purposes, the FBR has proposed Rs. 195 as the revenue generated per 1,000 views on videos shared on YouTube. The rate may be revised from time to time.
The rules also require creators to pay advance income tax under the existing law. Their social media income would have to be declared in a separate part of the annual income tax return.
If a creator declares income lower than the amount calculated under the proposed formula, the relevant tax commissioner would be allowed to rectify the return and recover the tax due under the Income Tax Ordinance.
The proposal marks one of Pakistan’s clearest attempts to tax the creator economy, a fast-growing segment where income can come from foreign platforms, local brand deals, sponsorships, affiliate marketing, and direct payments.
The move may affect YouTubers, TikTokers, Instagram influencers, and other digital creators who earn from online audiences in Pakistan. However, the exact impact will depend on how the final rules are notified and how the FBR applies the formula across different platforms.
Further Details
The measure has been proposed in the Finance Bill 2026 through a new Section 154B of the Income Tax Ordinance, 2001. The provision, titled “Withholding tax on revenues received from social media platforms,” appears on pages 63-64 of the Finance Bill.
Under the proposed law, every banking and non-banking financial institution will deduct tax when any amount is credited or received in a person’s account if that amount represents revenue from social media platforms.
The Finance Bill defines a “digital content creator” or “social media influencer” as any individual or entity earning income from the creation, publication, or monetisation of content on digital platforms, including YouTube, Facebook, Instagram, and TikTok.
The proposed tax will also cover payments received through banking channels, including inward remittances, transfers, and credits through online payment service providers or digital financial platforms.
The rate of tax has been set at 5% for resident persons whose names appear on the Active Taxpayers’ List. A 5% rate will also apply to non-resident persons, according to the rate table on page 85 of the Finance Bill.
For resident persons, the tax deducted under the new section will be treated as minimum tax. This means creators may still need to file returns and declare their full income, depending on their overall tax position.
For non-resident persons who do not have a permanent establishment in Pakistan, the tax will be treated as final tax.
The 30% expense adjustment is therefore a key part of the proposed social media tax framework. It reduces the income base used for calculation, but only within the limit allowed under the draft rules.
FBR has also been empowered to prescribe rules for implementation, including identification and reporting mechanisms. This means further details may be issued later on how banks, payment platforms, and taxpayers will identify social media income.
The amount of nonsense created here is off the charts.
No public hearing at all. Taxation should be fair. I am not a youtuber and yet even i see this is complete nonsense
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