Social media creators to pay five percent withholding tax

A Senate standing committee on Finance in Pakistan has approved a government proposal to impose a five percent withholding tax on income earned through social media platforms, including YouTube, Facebook, Instagram, and TikTok, while exempting individuals earning up to Rs. 600,000 annually.

The proposal was approved during a meeting of the standing committee, chaired by Senator Saleem Mandviwalla. The session also witnessed an interesting exchange between lawmakers and officials from the Federal Board of Revenue (FBR).

During the meeting, the FBR chairman apprised that currently a large number of Pakistanis were earning substantial income through social media platforms.

He stressed that the government was not stopping social media creators’ income but was instead aiming to collect its fair share.

Replying to this, the chairman standing committee on Finance, Senator Saleem Mandviwalla, said that people should be allowed to earn through social media, and the government was pursuing the tax because it saw a significant source of revenue.

Committee member Senator Abdul Qadir voiced concerns over the measure, arguing that young Pakistanis bringing foreign exchange into the country through online work should be allowed to work freely.

Despite the objections, the committee approved the proposal of a five percent withholding tax by a majority vote.

The FBR chairman clarified that the tax would not apply to all social media users. Under the proposed framework, individuals earning up to Rs. 600,000 per year from social media activities will remain exempt from taxation.

Those earning between Rs. 600,000 and Rs. 1.2 million annually will be subject to a five percent withholding tax.