New Tax Burden Targets Digital Creators

News Desk 

Islamabad: The National Assembly Standing Committee on Finance on Thursday approved a series of recommendations for the Finance Bill 2026-27 aimed at broadening the tax base, digitising tax administration, and streamlining compliance procedures.

Among the key measures endorsed by the committee was the introduction of a 5 per cent withholding tax on income earned through social media platforms, including YouTube. 

The tax will apply when earnings of content creators and digital influencers are remitted to Pakistan through formal banking channels.

Federal Board of Revenue (FBR) officials told lawmakers that income generated through digital platforms has expanded rapidly in recent years, with annual earnings estimated at around Rs10 billion. The proposed levy is intended to bring the growing digital economy into the documented tax system.

In a relief measure for businesses, the committee approved the withdrawal of the existing 1 per cent advance tax on exporters, a step expected to lower compliance costs and support export-led growth.

Read More: https://thepenpk.com/defense-taxes-and-salaries-dominate-budget-2026-27/

The panel also endorsed reforms related to inherited properties. Under the proposal, the valuation date for calculating capital gains tax will be linked to the transfer of ownership to heirs rather than the death of the original owner, a change aimed at ensuring a fairer tax treatment.

Lawmakers further approved legal protection for inherited assets transferred through family settlement agreements, reducing the risk of future legal disputes among beneficiaries.

As part of efforts to modernise tax administration, the committee backed mandatory electronic filing of income tax returns through the Inland Revenue Information System (IRIS). Companies will also be required to submit financial statements in machine-readable digital formats.

According to FBR officials, the measures will help eliminate manual tax return submissions, improve transparency, and enhance efficiency within the revenue collection system.

The committee additionally approved an algorithm-based tax settlement mechanism, allowing eligible taxpayers to revise returns without prior approval from tax authorities and without incurring penalties or surcharges, in a move designed to encourage voluntary compliance.