Budget 2026: Social Media Earnings to be taxed at source before reaching Pakistani Content Creators

KARACHI – Pakistan’s Budget 2026–27 introduces new tax system for social media earnings, bringing content creators on platforms like You Tube, Tik Tok, and Instagram into the formal tax net. As per proposal, banks will automatically deduct tax at the time payments are received, reducing earnings before they reach creators. The move extends earlier FBR measures and applies a structured formula for calculating digital income, aiming to tighten oversight of the country’s rapidly growing creator economy. The measure, introduced under the 2026–27 federal budget, marks one of the most aggressive attempts yet to formally bring social media income into the tax net, tightening oversight of thousands of content creators who have turned digital platforms into full-time revenue streams. Under the new system, any payments from social media platforms deposited into Pakistani bank accounts will automatically be subject to tax deduction. Banks will act as withholding agents, effectively cutting tax before creators can access their earnings. The framework builds on earlier steps taken by the Federal Board of Revenue (FBR), including SRO 545(I)/2026, which required non-resident individuals earning from social media in Pakistan to pay quarterly withholding tax and file specialized returns. The latest expansion, under draft SRO 546(I)/2026, now extends similar rules to resident creators. Income from monetized content will be calculated through a prescribed formula based on total earnings, with allowable expenses capped at 30% of revenue. FBR has also set a reference value of Rs195 per 1,000 YouTube views for estimating revenue under the new regime. The move comes amid a sharp rise in Pakistan’s creator economy, where thousands of individuals earn income through global platforms and receive foreign payments via local banking channels. While a 5% advance tax on online earnings already existed, enforcement had remained uneven and widely criticized for loopholes. Bad News for Pakistani YouTu