Pakistan imposes 5% withholding tax on social media income

ISLAMABAD: The government of Pakistan has announced a new 5 percent withholding tax on income earned by social media influencers under the Finance Bill for the fiscal year 2026-27.

The tax will apply to earnings from popular social media platforms such as YouTube, Facebook, TikTok, and Instagram. Under the new system, banks will deduct the tax before transferring payments into influencers’ accounts.

The move is part of the government’s efforts to bring online and digital earnings into the formal tax system and increase tax collection from the growing digital economy.

The Finance Bill also includes changes to the Super Tax regime. Finance Minister Muhammad Aurangzeb announced tax relief for many businesses to support investment and industrial growth.

According to the new structure, businesses earning between Rs150 million and Rs500 million annually will no longer have to pay Super Tax. Previously, these companies paid between 1 percent and 7.5 percent depending on their income level.

For companies earning more than Rs500 million per year, the Super Tax rate has been reduced from 10 percent to 8 percent.

The government said these measures are intended to reduce the tax burden on businesses, encourage economic activity, and support the manufacturing sector.

However, existing Super Tax and surcharge rates will remain unchanged for certain high-profit sectors, including banks, oil and gas exploration companies, and fertilizer firms.

Officials said this approach will provide relief to most industries while ensuring that major profitable sectors continue contributing to government revenues.