Banks to deduct tax directly from digital creator income under Budget 2026–27

ISLAMABAD, June 12, 2026 — Pakistan imposes withholding tax on income earned through social media platforms, including YouTube, Instagram and TikTok, as part of efforts to expand the tax base and regulate digital earnings.

(more…)

Budget 2026–27 aims to boost digital transactions and ease consumer costs

ISLAMABAD, June 12, 2026 — Pakistan slashes tax on international card payments to 0.5% from 5% as the government announces a major relief measure for consumers in the Budget 2026–27, according to official budget documents released on Friday.

The reduction applies to withholding tax on international debit and credit card transactions and represents one of the sharpest cuts in recent years for cross-border digital payments.

Relief for International Digital Transactions

The revised policy will lower the cost of international purchases made through debit and credit cards, including online shopping, subscription services, travel bookings, and other foreign payments.

Officials said the measure is designed to make cross-border transactions more affordable while encouraging greater use of formal banking channels.

The policy is also intended to support overseas Pakistanis and domestic users who rely on international digital services.

Push Toward Digital and Documented Economy

According to budget documents, the reduction is part of a broader strategy to promote digital financial activity and reduce reliance on cash-based transactions.

The government aims to expand the documented economy by incentivising consumers to conduct more payments through regulated banking systems, improving transparency in foreign currency flows.

Part of Wider Fiscal Reforms

The announcement comes alongside several other tax reforms introduced in Budget 2026–27, including reductions in property-related withholding taxes and a simplified retail tax scheme.

Officials said the reforms are designed to stimulate economic activity while balancing revenue requirements and encouraging investment across key sectors.

Economic Policy Focus

Government representatives said the overall reform package reflects an effort to support consumers, enhance financial inclusion, and modernise Pakistan’s payment ecosystem.

The measures are expected to play a role in strengthening digital adoption and improving efficiency in cross-border financial transactions over the coming fiscal year.