5% withholding tax on influencers announced

The federal government has announced the imposition of withholding tax on income generated through social media

The federal government has announced the imposition of withholding tax on income generated through social media platforms in the Finance Bill 2026–27.

According to the bill, tax will be deducted at the time of payment or transfer of earnings from social media platforms.

A 5% withholding tax will be applied when funds are credited to accounts linked with social media income.

The bill states that this tax will apply to both resident and non-resident individuals earning through digital platforms.

For registered taxpayers, a 5% deduction will be applied on income received from social media platforms.

In the case of non-resident individuals who do not have permanent residence in Pakistan, the same 5% tax will be treated as a final tax.

The Finance Bill defines social media influencers as individuals or entities earning income through digital platforms.

It further states that payments made through local remittances, transfers, or credits will be subject to withholding tax rules.

The government says the objective of the measure is to broaden the tax base and ensure documentation of digital earnings.

Officials indicate that the policy aims to bring online income into the formal tax system and improve revenue collection from the digital economy.

Moreover, The federal government has announced a new automated system to identify discrepancies in tax records.

Finance Minister Muhammad Aurangzeb shared the details during his budget speech in the National Assembly.He said the system will compare taxpayer-declared data with Federal Board of Revenue (FBR) records.

If any mismatch is found, the system will automatically generate an assessment offer.The offer will be based on the taxpayer’s past record and the nature of the discrepancy.

The finance minister said taxpayers will be informed through the IRIS online portal.He added that taxpayers who accept the offer will be required to correct their tax returns.

They will also need to pay the due amount.After compliance, the case will be considered closed.

Aurangzeb said third-party data will continue to be shared with the FBR.This includes transaction records from financial institutions and other sources.