Pakistan decides to impose heavy taxes on Facebook, Google digital ads

Pakistan decides to impose heavy taxes on Facebook, Google digital ads

ISLAMABAD – The tax collector, Federal Board of Revenue (FBR) has been recommended to impose a tax on Facebook and Google for digital ads.

A reputed body of Chartered Accountants has suggested the imposition of digital tax from next tax year on the premise that OECD (Organisation for Economic Co-operation and Development) is also mulling to tax the digitalized economy.

Institute of Chartered Accountants of Pakistan (ICAP) in its budget proposals recommended the tax collector that initially a digital tax can be introduced at the rate of 30 percent (on companies based outside Pakistan) on their income generated from advertisements within the country; Facebook and Google are among the most visited portals visited by the internet users in Pakistan and so the firms generate huge sums of money through advertisements with no share of government.

Social networking giant Facebook and search engine Google besides other portals earn massive revenues from corporates and consumers in Pakistan by advertisement on their websites and sharing consumer profiles/data with the corporates in Pakistan and outside but are not regulated as they are based offshore and there’s no mechanism of imposing tax as of now.

When companies or individuals advertise on social media, capital flies out of Pakistan, inflicting damage on the national kitty.

Besides a loss of revenue, these companies also affect indigenous tech industry by grabbing a fair share of local advertisements, without plans to set up business in Pakistan and create employment opportunities.

Contrary to Facebook and Google, firms like Ali Pay are investing within the country and have put their money in e-commerce giant like ‘Daraz’ link .

The FBR , with its new chief, is mulling over taxing the digital economy in line with the proposals forwarded by ICAP which also recommended the need of collection platform to replace cash economy through digitization e.g. Jazz Cash or Easy Paisa.