Special section will be added to the income tax return form.
The Pakistani government has proposed new tax amendments specifically targeting non-resident YouTubers who earn income from viewers within Pakistan.
The Federal Board of Revenue intends to recover a fixed rate of Rs 195 for every thousand views recorded.
These proposed changes aim to capture revenue from social media content that is sold to audiences living in Pakistan.
Finance Minister Muhammad Aurangzeb exercised special powers to notify these new procedures within the existing Income Tax Rules.
The FBR has officially provided a seven-day window for the public to submit any objections to these amendments.
Under the new law, the finance minister can prescribe special procedures for tax payments across several different economic sectors.
This specific measure will focus primarily on non-resident persons who derive their income from interactions with Pakistani digital users.
According to the FBR, the proposed rate of Rs 195 per 1,000 views is subject to periodic future revisions.
Currently, the standard revenue per 1000 views generally ranges from one dollar to three dollars for most content creators.
This proposed tax rate could translate into an effective income tax percentage between 16 percent and 66 percent.
Authorities acknowledge that enforcing such a measure will require active and consistent support from the management of YouTube directly.
“Every non-resident person deriving income from interaction with users in Pakistan through social media platforms, to the extent such income constitutes Pakistan source income.”
This move will mostly affect individuals based in countries like the United States, the United Kingdom and Canada.
These creators often produce content focused on the politics and the economy of Pakistan for an audience back home.
The special procedures apply to YouTubers who have over 50,000 users annually or 12,250 quarterly.
Taxable income will be calculated by taking total remuneration and subtracting total expenses up to a maximum of 30 percent.
The FBR will consider the higher value between the calculated view-based revenue and the actual remuneration received annually.
Every YouTuber who falls under this category must pay advance income tax and declare it on their tax returns.
A special section will be added to the income tax return form specifically for declaring this digital content income.
The Inland Revenue Commissioner has the authority to rectify any errors or omissions found within the submitted tax declarations.
If a creator underreports their earnings, the commissioner will proceed to recover the due amount as per the law.
This initiative is part of a broader effort to broaden the tax base and increase national revenue from digital sources.
The FBR believes that these systematic and continuous business activities should contribute fairly to the national exchequer of Pakistan.
However, critics argue that the proposed tax rate is quite high compared to the global standards for digital content creation.
The government remains firm on implementing these rules to ensure that all Pakistan source income are properly taxed.
The notification in the official Gazette will formalise these procedures once the seven-day objection period has finally concluded.
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