Govt seeks 5pc tax on social media earnings in budget 26-27

The federal government has proposed in the Finance Bill 2026 to impose a 5% withholding tax on revenue received by social media influencers through digital platforms like YouTube, Facebook, Instagram and TikTok.

The draft legislation states that banks and non-banking financial institutions will have to deduct the tax anytime payments related to social media profits are credited or received in an account.

The bill defines a social media influencer as someone who earns money through social media. The plan includes payments for domestic remittances, transfers and direct credits to accounts tied to digital content development and online activity.

The proposed framework proposes that resident individuals active tax payers will be subject to 5% withholding tax on their social media revenue. Non-resident persons and entities that earn revenue through such platforms will be subject to the same rate.

The Finance Bill provides that the withholding tax shall be the minimum tax liability for resident tax payers. Where there is no permanent establishment of a non-resident in Pakistan, the sum so deducted shall be deemed to be a final tax.

The plan is part of the federal budget for FY 2026-27, which was presented by Finance Minister Muhammad Aurangzeb in the National Assembly on Friday.

The government has recommended a total budget outlay of Rs18.771 trillion including Rs8.054 trillion for debt servicing Rs3 trillion for security spending and Rs1 trillion for the federal development project.