Pakistan’s new social media tax rule: Overseas creators with local audiences targeted
Overseas creators face 5% levy on Pakistan-linked social media income under new rules
Pakistan’s Federal Board of Revenue (FBR) has introduced a special procedure for taxing income earned from remunerative social media content, according to Pakistani media reports.
The rules apply to resident and non-resident persons earning Pakistan-source income through interaction with users in Pakistan, subject to prescribed thresholds.
The procedure was introduced through SRO 1641(I)/2026 and SRO 1642(I)/2026 under the Income Tax Ordinance, 2001.
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Who falls under the rules?
The FBR has set a threshold of:
More than 50,000 users during a tax year, or
More than 12,250 users during a quarter
The threshold is linked to what the FBR describes as systemic and continuous solicitation of business activities or engagement through digital means.
A 5% tax rate applies
The government had introduced a 5% tax rate on social media content earnings in the budget.
The new procedure sets out how income from remunerative social media content will be calculated and declared.
How will taxable income be calculated?
The minimum income for a tax year will be calculated by deducting allowable expenses from total remuneration.
Expenses will be allowed up to 30% of total revenue.
Total remuneration will be whichever is higher:
Actual remuneration received from social media content, or
Income calculated using the FBR’s prescribed revenue-per-mille (RPM) formula.
YouTube views get a fixed RPM
The FBR has prescribed an RPM of Rs195 for every 1,000 YouTube video views under the special procedure.
The rate can be revised by the FBR from time to time.
If a taxpayer claims that their actual earnings are lower than the amount calculated using the RPM, they must provide evidence to the Commissioner to establish the lower income.
Quarterly tax payments and annual declaration
People covered by the rules will have to pay quarterly advance income tax under Section 147 of the Income Tax Ordinance.
The income must also be declared in a special section of the annual income tax return.
If declared income is lower than the amount calculated under the prescribed procedure, the relevant Commissioner can rectify the return and recover the amount due.
Why tax social media income?
The move comes as social media has become an increasingly important source of income through advertising, sponsorships, views and other forms of digital monetisation.
The FBR has specifically created a framework to bring such earnings into the tax system, including income earned by non-resident individuals through interactions with users in Pakistan.
What counts as social media content?
The FBR defines a social media platform as an internet-based service that enables users to interact and share user-generated content, with economic value derived from user participation, network effects and monetisation of engagement or user data.
Remunerative social media content covers digital content that generates remuneration in any form.
Other provisions of Pakistan’s Income Tax Ordinance, 2001 will continue to apply where they are not specifically addressed by the new procedure.
With inputs from Federal Board of Revenue notification
