Pakistani authorities introduced additional taxes on Netflix, directing banks to deduct a 13 percent provincial sales tax on advertisement services last year.
As a result, commercial banks are now taxing video-on-demand streaming services more heavily in line with the new regulations. With the latest adjustments, Netflix subscribers in Pakistan who pay with a debit or credit card will also face a 3 percent sales tax on the services.
Moreover, filers must pay a 5 percent advance tax on foreign transactions, on top of the federal excise duty (FED). Card transaction fees are imposed at 4 percent. For non-filers, the advance tax on foreign transactions is 10 percent.
Commercial banks will collect this additional tax on Netflix on behalf of the Sindh Revenue Board.
This development follows a tax notice issued by the Federal Board of Revenue (FBR) to Netflix, demanding the recovery of lakhs of rupees. The top tax authority directed Netflix to pay Rs 200 million in taxes on income from the last two years.
Reports indicate that Netflix earned over one billion rupees in Pakistan in 2021 alone, as the South Asian country has a large number of subscribers.
