The Government of Pakistan has introduced a new digital tax law that mandates taxation on earnings generated from YouTube, social media platforms, and various online services. According to reports, income derived from audio, video, and music streaming services will now be subject to tax, along with other digital sectors. The legislation also applies to telemedicine, e-learning platforms, cloud services, and online banking in Pakistan.

Furthermore, e-commerce websites, online stores, and digital marketplaces will also fall under the scope 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. This tax must be deposited into the Pakistan national treasury by the 7th of each month.

Failure to deduct or deposit the tax will result in legal action against the concerned financial institutions. Under the new framework, all social media platforms operating in Pakistan are now obligated to submit quarterly reports to the government. 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 on failure to submit the required quarterly report. Additionally, if a foreign company fails to comply with tax payments for three consecutive months, the bank transfers to that entity will be suspended. This move is part of the government’s broader effort to enhance digital economy regulation and ensure tax compliance from rapidly growing online sectors.

Credit: Independent News Pakistan (INP)