Pakistan’s new social media tax rule: Overseas creators with local audiences targeted

The Federal Board of Revenue (FBR) in Pakistan has implemented a new procedure for taxing income generated from remunerative social media content, targeting both resident and non-resident individuals with audiences in Pakistan, according to recent reports. The rules, introduced through SRO 1641(I)/2026 and SRO 1642(I)/2026 under the Income Tax Ordinance, 2001, apply when the income exceeds certain thresholds: 50,000 users per tax year or 12,250 users per quarter. A 5% tax rate is imposed on such earnings.

To calculate taxable income, the minimum is determined by subtracting allowable expenses, up to 30% of total revenue, from the total remuneration. Total remuneration is the higher of actual earnings from social media or the income calculated using the FBR's prescribed revenue-per-mille (RPM) formula. The RPM for YouTube views is set at Rs195 per 1,000 views, though it can be revised by the FBR.

Taxpayers must pay quarterly advance income tax and declare the income in a special section of their annual return. If the declared income is lower than the calculated amount, the relevant Commissioner can adjust the return and recover the due amount. Social media income is considered any digital content that generates remuneration through user participation, network effects, or monetisation of engagement or data.

The FBR defines a social media platform as an internet-based service enabling users to interact and share content, with value derived from user engagement and network effects. Remunerative social media content covers digital content that generates remuneration in any form. The new rules complement other provisions of Pakistan’s Income Tax Ordinance, 2001.