FBR sets new benchmark for taxing social media creators
“Federal Board of Revenue (FBR) has introduced a new mechanism to tax income earned by social media creators, using a benchmark of Rs195 ($0.71) earnings for every 1,000 You. Tube views, officials said. T…”
Tube views, officials said. The new mechanism comes as Islamabad seeks to bring the country’s rapidly expanding digital economy into the formal tax system. It follows an April regulatory order by the FBR that introduced a new tax framework for individuals earning from content on social media platforms.
As part of the same framework, the tax authority issued a new notification on Sept. 23 to create a special procedure for taxing people earning income from “remunerative social media content.” It allows creators to deduct expenses of up to 30 percent of their revenue when calculating taxable income under the mechanism.
On Tuesday, an FBR official said the new rules did not apply to content that received views but generated no income, clarifying that the mechanism is intended for remunerative or monetized social media content.
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“Once it is clear that the content is monetized, the formula multiplies Rs195 by the ‘total number of views in 1000s’,” the official, who requested anonymity as he was not authorized to speak to media,.
Asked about the rationale behind the benchmark, the official said: “This figure of PKR195 was used because our research and interactions with people making monetized content in Pakistan lead us to this figure. This is the below average amount normal Pakistani content fetches per 1000 views on You.
Tube across different types of content and different types of content creators.”For platforms other than You.
Tube, where creators may be paid not be paid, creators would declare their total remunerations earned during a specified period., remuneration is calculated as the higher of two amounts: the revenue-per-thousand-view benchmark multiplied by total views divided by 1,000, or the actual remuneration received by a creator, whether in cash or kind.
It allows content creators to demonstrate if their actual remuneration was below the Rs195-per-1,000-view benchmark. “If a person is of the view that the total remuneration received is less than the threshold prescribed... the person is required to demonstrate evidence to this effect to the satisfaction of the Commissioner,” the notification read.
Speaking to Arab News, the FBR official said acceptable evidence could include platform revenue reports, payout statements matched to bank credits, withholding certificates and contracts or invoices relating to sponsorships and goods received.
“The tax commissioner can also ask a creator to provide access to their social media dashboard under relevant legal provisions,” the official said, adding a creator whose post simply attracts views but is not monetized, sponsored or otherwise remunerated would not be subject to the view-based estimate.
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