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

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

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

Social networking giant Facebook and search engine Google besides otherportals earn massive revenues from corporates and consumers in Pakistan byadvertisement on their websites and sharing consumer profiles/data with thecorporates in Pakistan and outside but are not regulated as they are basedoffshore and there’s no mechanism of imposing tax as of now.

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

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

Contrary to Facebook and Google, firms like Ali Pay are investing withinthe 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 inline with the proposals forwarded by ICAP which also recommended the needof collection platform to replace cash economy through digitization e.g.Jazz Cash or Easy Paisa.