Netflix Subscription Fees in Pakistan Now Subject to Tax -

Netflix subscribers in Pakistan will now pay an additional 3% sales tax on IT services, with banks collecting the tax as withholding agents.

A new tax has been imposed on the video-on-demand streaming service Netflix in Pakistan. Netflix subscribers using debit cards to pay their subscription fees will now have to pay a 3% sales tax on IT services. Banks will act as withholding agents to collect the additional tax from Netflix.

Last year, after compelling banks to deduct 13% provincial sales tax on advertising services, the Sindh Revenue Board (SRB) has now imposed an additional tax on Netflix.

According to media reports, a 5% advance tax on international transactions (for filers), along with federal excise duty and 4% card transaction charges, has been set. For non-filers, the advance tax on international transactions will be different, with a 10% advance tax for non-ATL (Active Taxpayer List) individuals.

Subscription plans in Pakistan are priced as follows:

Mobile: PKR 250 per month
Basic: PKR 450 per month
Standard: PKR 800 per month
Premium: PKR 1,100 per month

Company has clarified on its website that taxes may be applied in addition to the subscription fee, depending on the user’s location. The new Finance Bill 2024 has included tech companies that earn money through digital means in Pakistan under the tax net.

It is important to note that Netflix is a streaming service offering TV shows, movies, documentaries, and more on thousands of internet-connected devices. The service provides various subscription plans ranging from PKR 250 to PKR 1,100 per month, allowing users to watch its content.

Last month, Pakistan’s Federal Board of Revenue (FBR) issued a notice to the streaming giant for the recovery of over PKR 200 million in income tax. According to media reports, the Additional Commissioner of the CTO Islamabad demanded over PKR 200 million for two different years under Section 6 of the Income Tax Ordinance (ITO) 2001. Netflix had declared revenue of PKR 1.3 billion in Pakistan during the financial year 2021.

By: Sadia Sheikh