The Sindh Revenue Board (SRB) has imposed additional taxes on the video-on-demand Internet streaming service, Netflix, as banks will now charge a new tax on it in Pakistan.
Netflix users are now subjected to a series of taxes when paying their subscription fees with debit or credit cards, including:
- A 3% sales tax on IT services
- A 5% advance tax on international transactions for filers
- A 4% card transaction charge
- Federal excise duty
The SRB has implemented new tax rules designating banks and other financial entities authorized by the State Bank of Pakistan as “collecting agents.” Under these rules, the SRB has imposed a 3% Sindh sales tax on certain services, including cloud-based content streaming platforms like Netflix.
The SRB has mandated that banks and other authorized payment processors collect a 3% tax when Netflix users in the relevant jurisdiction make payments to Netflix using any means. These new rules, known as the “Sindh Sales Tax Special Procedure (Tax on Specified Services) Rules, 2023,” were imposed in September 2023 to facilitate the collection of this tax on cloud-based content streaming services where payments are made to a service provider not residing in Pakistan.
Netflix offers several subscription tiers in the region, with prices ranging from Rs. 250 per month for the Mobile plan to Rs. 1,100 per month for the Premium plan. Netflix states on its website that customers may be charged additional taxes depending on their location, on top of the base subscription fees.
