Pakistani authorities have decided to impose several new taxes on Netflix, affecting both the company and its users in the country.
Banks in Pakistan are now mandated to deduct a 13 percent provincial sales tax on the advertising services utilized by Netflix. This means that whenever Netflix advertises its services, it will incur an additional tax imposed by the provincial government.
For Pakistani Netflix subscribers, a new 3 percent sales tax on subscription fees paid via debit or credit cards has been introduced. Consequently, users will see a slight increase in their subscription costs due to this new tax.
Additionally, there is an advance tax on international transactions. When Pakistanis make transactions with international companies like Netflix, they must pay an extra tax. The rate is 5 percent for those who file their taxes and a higher rate of 10 percent for those who do not.
Furthermore, there is a 4 percent card transaction charge and a federal excise duty. All these taxes will be collected by the Sindh Revenue Board, which is responsible for overseeing these new tax regulations.
This new taxation scheme follows a notice sent by the Federal Board of Revenue (FBR) to Netflix, demanding the company pay 200 million Pakistani rupees in taxes for the past two years.
The FBR’s demand is based on Netflix’s earnings of over one billion Pakistani rupees in the country in 2021.
