ISLAMABAD

The Senate Standing Committee on Finance has approved a proposal to impose a 5 percent withholding tax on income earned through social media platforms, marking a significant move to bring Pakistan’s growing digital creator economy into the tax net.

The committee meeting, chaired by Senator Salim Mandviwalla, witnessed an interesting exchange between lawmakers and tax authorities over the proposed levy on content creators, influencers, freelancers, and other individuals earning through digital platforms.

Chairman Federal Board of Revenue (FBR) Rashid Mahmood Langrial defended the proposal, arguing that a large number of people are generating substantial income through social media and that the government was seeking its share of the growing digital economy.

However, several lawmakers expressed concerns that additional taxation could discourage online entrepreneurship and foreign exchange inflows. Senator Salim Mandviwalla remarked that people should be encouraged to earn through social media, while committee member Senator Abdul Qadir urged authorities to support individuals contributing to the economy through digital platforms.

Responding to the concerns, the FBR chairman clarified that annual social media earnings of up to Rs600,000 would remain exempt from taxation. Under the approved proposal, a 5 percent withholding tax would apply to income ranging between Rs600,000 and Rs1.2 million.

The measure comes as Pakistan’s digital economy continues to expand, with content creators, freelancers, and online entrepreneurs emerging as important contributors to foreign exchange earnings and digital exports.

The proposal will now move forward as part of the broader budgetary and taxation framework for further legislative consideration.