FBR introduces special tax mechanism for social media earners

The Federal Board of Revenue has introduced a special tax mechanism for people earning income through social media, adding a new chapter to the Income Tax Rules, according to a report by Express News.

The rules apply to resident individuals in Pakistan who receive income from social media, the FBR said. Under the new provisions, taxpayers will be allowed to deduct up to 30 percent of their expenses from social media earnings when calculating taxable income. The minimum taxable income will be determined after subtracting allowable expenses from gross income, the revenue authority stated. The FBR did not specify which expenses are allowable in the report.

If a taxpayer's actual income is lower than the prescribed threshold, the person will have to provide proof of the lower figure to the tax commissioner. The threshold was not mentioned in the Express News report. The FBR also did not state when the new rules will take effect.

Gross income from social media will be calculated on the basis of views and actual income received, with both used for assessment, the FBR said. The calculation can also be done through income per 1,000 views. Any actual income received in cash or in any other form will also have to be included in the taxable amount. The FBR said the law applies to social media platforms, social media content, and remunerative content.

Social media earners will be required to pay advance tax every quarter. When filing income tax returns, they will have to declare social media income in a separate section. If a taxpayer declares a lower amount, the commissioner has the authority to correct it, the FBR said.

The Express News report did not include the prescribed income threshold, the specific rate per 1,000 views, or the date from which the new rules will be effective. The report was based on a statement by the FBR.