From July 1, 2026, banks and other financial institutions across Pakistan will begin deducting a 5% withholding tax on income earned by digital content creators, freelancers, and social media influencers through online platforms such as YouTube, Facebook, Instagram, TikTok, and similar digital services.
The new tax measure has been introduced under the Finance Act 2026 and applies to payments received through formal banking channels, including foreign remittances, online payment gateways, and other digital income transfers. Financial institutions will be responsible for deducting the tax before transferring the funds to the recipient.
Under the revised tax framework, resident content creators will still be able to file their annual income tax returns and claim eligible business-related expenses. However, the 5% withholding tax deducted at source will be treated as the minimum tax payable on their digital earnings.
Meanwhile, non-resident digital creators who do not have a permanent establishment in Pakistan will be subject to a final 5% withholding tax, with no further tax liability on that income.
The government says the measure is aimed at bringing Pakistan’s rapidly growing digital economy into the formal tax system while ensuring greater documentation and transparency of income generated through online platforms.
