The Federal Board of Revenue (FBR) has introduced a special mechanism for taxing income earned by resident and non-resident individuals who produce social media content in return for compensation. Under the new procedure, taxable income will be determined through a prescribed formula based on the number of views and the actual compensation received.
The FBR issued three notifications on Wednesday in this regard. Through SRO 1640(I)/2026, the tax authority defined individuals earning income from compensated social media content. SRO 1641(I)/2026 covers resident individuals, while SRO 1642(I)/2026 applies to non-resident individuals.
Under the new mechanism, the rules will apply to non-residents where income generated from social media content is considered income sourced from Pakistan through interaction with users in Pakistan and the prescribed user threshold is met.
The FBR has set a threshold of more than 50,000 users during a tax year or 12,250 users in a quarter for an activity to be considered a continuous and systematic pursuit of business or interaction with customers through digital means.
Under the procedure, the minimum taxable income from social media content will be calculated by deducting allowable expenses from gross compensation. However, allowable expenses will be restricted to a maximum of 30% of gross income.
For determining gross compensation, the FBR has decided to use the higher of the amount calculated under the prescribed Revenue Per Mille (RPM) formula or the actual compensation received. For YouTube videos, the RPM has been set at Rs195 per 1,000 views, subject to revision from time to time.
If an individual actually receives less compensation than the amount calculated under the prescribed RPM, they will be required to provide evidence of the lower income to the satisfaction of the relevant commissioner.
The FBR has also introduced quarterly advance income tax for such individuals. Income earned through social media will have to be declared in a dedicated section of the tax return. If an individual declares lower income, the relevant commissioner will have the authority to correct any error or omission in the return and recover the amount due.
According to the notifications, a social media platform refers to an internet-based service that enables users to interact with one another and share user-generated content. Compensated social media content covers content that generates income of any kind.