Under the new regulations, Netflix subscribers will now face a 3% sales tax on IT services, alongside a 5% advance tax on international transactions for filers, a 4% card transaction charge, and a federal excise duty on debit or credit card payments made towards Netflix subscriptions.
The SRB has designated banks and other financial entities authorized by the State Bank of Pakistan as collecting agents responsible for enforcing these taxes. This move is part of the newly implemented “Sindh Sales Tax Special Procedure (Tax on Specified Services) Rules, 2023,” aimed at regulating tax collection on cloud-based content streaming platforms like Netflix.
Reacting to the development, Netflix has acknowledged on its platform that additional taxes may apply depending on the user’s location in Pakistan, which will be added to the base subscription fees.
This announcement comes amidst broader efforts by the Pakistani government to enhance tax compliance in the digital economy. Recently, the Federal Board of Revenue (FBR) issued a tax recovery notice to Netflix, demanding payment of over 200 million Pakistani rupees in unpaid income tax under the provisions of the Income Tax Ordinance of 2001.
As these tax measures take effect, Pakistani subscribers of Netflix are advised to review their billing statements for the inclusion of these new taxes to avoid any payment discrepancies.
Stay tuned for further updates on this developing story.
