FBR proposes framework to tax earnings from social media content

ISLAMABAD (Web Desk) - The Federal Board of Revenue (FBR) this week issued a draft amendment introducing a new tax framework for individuals earning income from content on social media platforms, with the rules stating that content publishers with over 50,000 subscribers will be liable to pay tax on their income.

As per a statutory regulatory order (SRO) issued by the FBR on Wednesday, the scope of the new tax framework will apply to every non-resident person deriving income from their interaction with users in Pakistan through social media platforms, to the extent that such income constitutes Pakistan-source income.

The FBR said any person with more than 50,000 subscribers during a tax year or 12,250 subscribers during a quarter will be liable to pay tax on earnings generated from content on social media.

“The provisions of the Ordinance not specifically dealt with in the aforesaid rules shall apply, mutatis mutandis, to persons earning income from remunerative social media content,” the FBR notification, a copy of which was seen by Arab News, stated.

The FBR invited suggestions and objections to the framework from stakeholders within seven days of the notification’s date of issue.

The notification defined a “social media platform” as an Internet-based service whose primary purpose is to enable users to interact with other users and share user-generated content.

It said for a platform to classify as social media, it must generate economic value from user participation, network effects and the monetization of user engagement or user data.

It further defined “social media content” as any digital information, communication, or creative material generated or published by a user on a social media platform, the value of which arises from user engagement, audience reach, or platform- facilitated dissemination.

It said this would include content capable of generating advertising, sponsorship, or other monetization of revenue.

The FBR said the total taxable income of an individual from social media would be calculated after deducting his total earnings from his total expenses. It capped expenses at a maximum of 30 percent of the total revenue generated from social media content.

The tax body said revenue will be assessed using a formula based on revenue per 1,000 views [set at Rs195 by the FBR], average views per post and the total number of posts done annually.

The FBR said that the higher of either the assessed income or remuneration received by a person from their social media content, whether in cash or kind, will be considered taxable income.

The FBR said social media income must be declared separately in tax returns, adding that underreporting can be corrected by tax authorities with the recovery of dues.