The Federal Board of Revenue has ordered the US tech giant Facebook. Google and YouTube to come under the tax net in order to operate in Pakistan. This is not the first time such a step is taken against these companies, previously, Pakistan proposed 5% tax on digital revenues in 2018, but these companies were never willing to pay it. Collecting taxes from Google, YouTube and Facebook is not easy so the government has come up with another plan.
This time FBR has taken a stronger stance as announced by FBR Member Inland Revenue (Operations) Dr. Muhammad Ashfaq Ahmed during the meeting of the National Assembly Standing Committee on Finance and Revenue. He revealed that FBR has also demanded a 1.4 billion deceleration in income tax by Netflix.
FBR Orders Facebook, Google & YouTube to Pay Taxes or Shut Down in Pakistan
However, it should be noted that Pakistan is not the only country that wants to bring these digital companies under the tax net for driving significant revenues, in fact, India and Europe are also in negotiations with these companies for the same reason. Australia took the lead by passing a law that imposed payment obligations on Big Tech.
No doubt, these companies should pay a fair share of the earnings they make from domestically produced news content on the internet.
Pakistan can generate handsome tax revenues from these corporate companies. But unfortunately, corporations do not pay taxes according to their taxable liabilities. Hight corporate tax rates in Pakistan are one of the reasons why companies are reluctant to pay taxes. Furthermore, these social media companies look for ease of doing business in Pakistan and by imposing the tax, it gets difficult for them to perform. So in this case, Government should go for a win-win plan by imposing less taxes on these companies initially for bringing them under the tax net and at the same time giving them ease to do business in Pakistan.