Govt proposes 5% withholding tax on social media earnings

ISLAMABAD: The federal government has proposed a 5% withholding tax on revenues earned by social media influencers from platforms such as YouTube, Facebook, Instagram and TikTok.

According to the Finance Bill, 2026, every banking and non-banking financial institution will be required to deduct tax at the time of credit or receipt of any amount in an account where the amount represents revenue received from social media platforms.

Under the proposal, a 5% tax deduction will apply to income received by resident individuals who are active taxpayers. Non-resident persons 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 individual or entity that earns income through a social media platform.

It further states that payments may be made through domestic remittances, 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, according to 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 economic situation due to an energy crisis amid the Middle East tensions.

Presenting his term’s third budget in the National Assembly, the finance minister noted: "This budget is being presented at a time when Pakistan has achieved the 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 envisaged Rs18,771 billion budget, the finance minister said that the largest share — Rs8.054 trillion — has been earmarked for mark-up payments, followed by Rs3 trillion for defence and Rs1 trillion for the federal development programme.