In a significant move impacting digital entrepreneurs, the federal government announced a proposal to impose a 5% withholding tax on revenues earned by social media influencers from platforms including YouTube, Facebook, Instagram, and TikTok. This measure forms part of the Finance Bill, 2026, and aims to streamline tax collection from the burgeoning digital economy.
According to the Bill, both banking and non-banking financial institutions will be obligated to deduct this tax when crediting or receiving any amount in an account that represents revenue from social media platforms. This applies to both resident individuals who are active taxpayers and non-resident individuals deriving income through these channels. A five per cent tax deduction will be applicable on income received by residents who are active tax payers and non-residents will be subject to a five per cent withholding tax. As per the Bill, a social media influencer is anyone or any entity that earns an income through a social media platform.
Finance Minister Muhammad Aurangzeb, while presenting a national budget of Rs18,771 billion, highlighted the fragile economic situation that the government tried to balance against the backdrop of an ongoing energy crisis and Middle East tensions.
During the review of the Finance Bill 2026-27, the Senate Standing Committee on Finance and Revenue, chaired by Senator Saleem Mandviwalla, approved the proposal. Discussions revealed that individuals earning up to Rs. 600,000 annually from social media would be exempt from this tax, while earnings between Rs. 600,000 and Rs. 1.2 million would attract the proposed five per cent rate.
Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial informed the committee of the growing incomes being generated through social media, emphasizing the government’s intention to harness a share of these earnings through the new tax structure.
Despite some opposition from committee members like Senator Abdul Qadir, who expressed concerns over the potential deterrent effect on foreign exchange inflows and the broader digital economy, the committee moved forward with the approval of the tax imposition.
