NA Panel approves 5% tax on YouTubers

The National Assembly Standing Committee on Finance has approved several key recommendations for the

The National Assembly Standing Committee on Finance has approved several key recommendations for the Finance Bill 2026-27, including the introduction of a 5% withholding tax on income earned through social media platforms such as YouTube.

The committee, chaired by Syed Naveed Qamar, reviewed a range of tax proposals presented by officials of the Federal Board of Revenue (FBR). Under the approved recommendation, content creators and digital influencers will be subject to a 5% withholding tax when their earnings are transferred to Pakistan through formal banking channels.

FBR officials informed lawmakers that income generated through social media platforms has grown significantly in recent years, reaching an estimated Rs10 billion. The proposed tax is aimed at bringing digital earnings into the formal tax framework.

The committee also approved the abolition of the existing 1% advance tax on exporters, a move expected to provide relief to the export sector and improve business competitiveness.

In addition, lawmakers discussed changes to the taxation of inherited properties. The committee agreed that the cost base for calculating capital gains tax should be determined from the date ownership is transferred to an heir rather than the date of the original owner’s death. The proposal is intended to provide greater clarity and fairness in property taxation.

The committee further endorsed legal protection for inherited properties transferred through family settlement arrangements, helping safeguard heirs from potential legal complications.

Another major decision was the approval of mandatory electronic filing of income tax returns. Under the new proposal, all taxpayers will be required to submit returns through the Inland Revenue Information System, while companies must file financial statements in machine-readable digital formats.

FBR officials said the move will fully phase out manual tax return submissions, which are still accepted in limited locations, and strengthen transparency and efficiency within the tax system.

The committee also approved an algorithm-based tax settlement mechanism. Under this system, eligible taxpayers will be able to submit revised tax returns without prior approval from tax authorities and without facing additional penalties or surcharges.