Government will now collect taxes from Google, Facebook and Twitter directly

In recent news, the Federal Cabinet has approved a framework that makes social media companies work with the government in regards to their devised rules and regulations.

The framework mentions that the social media giants including Facebook, Google, Twitter, etc. will be able to set up their offices in Pakistan but will have to file taxes to the Federal Board of Revenue (FBR).

As of now, the FBR has made a revenue collection target of Rs. 10 billion from the respective media companies and overall sector for the duration of 2021-2022. However, this is not possible presently as the social media companies have to at least ensure that their offices are established in the country.

Moreover, the government has introduced a sub-clause 22B in section and amended section 6 of the Income Tax Ordinance through the Finance Act which states that all offshore digital services shall face a 15% fee. The main reason behind this is to overall impose taxes on all respective digital services including assets and infrastructures. This would also bring digital services such as online sales and purchases under the tax net.

This move has been taken in order to take fewer taxes from the citizens of the country and impose more on those companies that provide digital services.

In a nutshell, this is the sole reason behind the bringing about of a framework that clearly involves tech giants working locally from the country.