KARACHI: The Sindh Revenue Board (SRB) has announced additional taxes on Netflix, the popular video-on-demand streaming service. The new regulations include a 3% sales tax on IT services, a 5% advance tax on international transactions for filers, a 4% card transaction charge, and a federal excise duty on Netflix subscription fees paid via debit or credit cards.
Under these new rules, banks and financial entities authorized by the State Bank of Pakistan will act as “collecting agents” responsible for enforcing the taxes on behalf of SRB. These measures are part of broader efforts outlined in the Finance Bill 2024, aimed at taxing digital companies that generate income within Pakistan.
Netflix offers several subscription tiers in the region, ranging from Rs. 250 per month for the Mobile plan to Rs. 1,100 per month for the Premium plan. The company’s website now notifies customers that additional taxes may apply based on their location, in addition to the base subscription fees.
Recently, the Federal Board of Revenue (FBR) issued a notice to Netflix, seeking the recovery of over Rs. 200 million in income tax under section 6 of the Income Tax Ordinance, 2001. This action underscores government efforts to ensure that offshore digital service providers operating in Pakistan comply with tax regulations, despite attempts by some companies to exploit Double Taxation Agreements (DTAs) to potentially evade taxes.
The new tax regime on Netflix is expected to directly impact consumers, who will bear the brunt of these additional charges when paying for their subscriptions. This development marks a significant step in Pakistan’s tax policy aimed at capturing revenue from digital services operating within its borders.Top of Form
