Pakistan Introduces New Digital Tax Law Targeting Online Earnings and Platforms

The Government of Pakistan has introduced a comprehensive digital tax policy designed to regulate and tax income generated through various online platforms and services. This move is part of the country’s broader strategy to enhance revenue collection in the rapidly expanding digital economy.

Under the new law, earnings from content on YouTube, social media platforms, and digital streaming services — including audio, video, and music — will now be subject to taxation. In addition to content creators, the regulation encompasses a wide range of digital services such as telemedicine, e-learning, cloud computing, and online banking.

E-commerce platforms, digital marketplaces, and online stores operating in Pakistan will also come under the purview of the new tax structure. Furthermore, financial institutions — including banks and exchange companies — involved in transferring payments to international service providers are now mandated to deduct a 5% tax on these transactions. The deducted amount must be submitted to the national treasury by the 7th of each month.

Strict penalties have been introduced for non-compliance. Financial institutions that fail to deduct or deposit the tax within the given timeframe may face legal consequences.

In a significant step toward regulatory oversight, social media companies are now required to file quarterly reports with the Pakistani government, detailing their operations and earnings within the country.