Pakistan imposes 5% withholding tax on digital creators' earnings

The Federal Board of Revenue (FBR) has introduced a 5% withholding tax on income earned from social‑media platforms for Tax Year 2027, effective 1 July 2026. The tax is levied under Section 154B of the Income Tax Ordinance, 2001 and applies to earnings from platforms such as YouTube, Facebook, Instagram, TikTok and similar services.

All banking and non‑banking financial institutions in Pakistan must deduct the tax at the point of payment into a creator’s account. Registered tax filers face a 5% deduction, while non‑filers are taxed at 10%. For resident taxpayers the withheld amount is treated as minimum tax; for non‑resident persons without a permanent establishment it is final tax. The measure aims to bring the rapidly growing creator economy into the formal tax base and is enforced through the banking channel because foreign platforms cannot be compelled to withhold tax directly.