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.
According to officials, the tax will be deducted at source by banks handling payments to content creators and digital influencers.
Tax to Cover Digital Earnings
The policy applies to advertising revenue, sponsorship income, and monetised content generated on social media platforms.
It will cover both individual content creators and businesses operating in the digital economy, officials said.
Banks to Act as Withholding Agents
Under the new system, banks will automatically deduct the applicable tax before transferring payments to creators.
Authorities said this mechanism is designed to improve compliance and reduce tax evasion in the rapidly growing online sector.
Move to Formalise Digital Economy
The Federal Board of Revenue (Federal Board of Revenue) is expected to issue detailed guidelines for banks and financial institutions, including implementation procedures and reporting requirements.
Officials said the measure will bring digital earnings into the formal tax net and improve income tracking across online platforms.
Part of Broader Budget Reforms
The decision forms part of wider fiscal reforms introduced under Budget 2026–27 aimed at strengthening documentation of the economy and increasing transparency in financial transactions.
Authorities said the digital taxation framework is intended to ensure fair contribution from the fast-expanding social media and online content industry.
