ISLAMABAD: The federal government has proposed a 5% withholding tax on income that is affected by social media from platforms like YouTube, Facebook, Instagram and TikTok.
According to the Finance Act, 2026, every banking and non-banking company will be required to deduct tax at the time of crediting or receipt of any amount in an account where the amount represents income received from social media platforms.
Under the proposal, there will be a tax deduction of 5% for income received by resident persons who are active taxpayers. Non-resident individuals receiving income through such platforms will also be subject to a 5% withholding tax.
The Finance Bill 2026 defines a social media influencer as any person or entity that earns income through a social media platform.
It also states that payments can be made through domestic money transfers, transfers or account credits. The proposed tax will constitute the minimum tax liability for resident persons.
For non-residents who do not have a permanent establishment in Pakistan, the withholding tax deducted will be treated as a final tax under the bill.
Finance Minister Muhammad Aurangzeb on Friday presented a budget with a total outlay of Rs18.771 billion as the federal government tries to balance a fragile financial situation due to an energy crisis amid Middle East tensions.
Presenting the third budget of his term in the National Assembly, the finance minister remarked: “This budget is being presented at a time when Pakistan has achieved status in the eyes of its people and the world as a country whose voice is listened to and whose friendship is desired.”
Giving a breakdown of the expected budget of Rs18.771 billion, the finance minister said the largest share – Rs8.054 trillion – has been earmarked for increment payments, followed by Rs3 trillion for defense and Rs1 trillion for the federal development programme.
