Pakistani content creators now lose 5% or 10% of their foreign platform payments before the money reaches their accounts. Many say the tax is charged on income they never actually kept.

Creators and influencers have asked the Federal Board of Revenue (FBR) to review the withholding tax on social media earnings. They want a framework that counts production costs and supports digital entrepreneurship.

How the withholding tax works

The tax falls under Section 154B of the Income Tax Ordinance 2001. Under the Finance Bill 2026-27, banks deduct it when creators receive international payments from YouTube, Facebook, Instagram and TikTok.

A withholding tax is collected at the source. The bank takes its share when the payment arrives, so the creator never handles the full amount.

Filers, who are registered taxpayers submitting returns, pay 5%. Non-filers pay 10%.

The FBR has also set a minimum benchmark of Rs195, about $0.70, per 1,000 YouTube views. The benchmark was issued through SRO 642(I)/2026 and SRO 1641(I)/2026.

Where creators say the rules fall short

The main complaint is the expense ceiling. The FBR allows creators to deduct only 30% of total revenue as costs.

Creators say their real spending often goes past that. Cameras, lighting, editing software, internet connections and travel all add up, particularly for those who film outside their homes.

A simple example shows the gap. Take a creator who earns Rs100,000 and spends Rs50,000 on production. The 30% cap lets them deduct Rs30,000, so they are assessed on Rs70,000. Their real profit is Rs50,000, which means the taxable figure is 40% higher than what they earned.

What creators actually earn

Reported earnings vary widely, and most creators sit well below the headline figures that circulate online.

The last row matters for context. A salaried creator in Karachi earns a median of Rs60,000 a month. Mid-tier freelancers at the low end of the range make less than that, and they carry their own equipment and internet costs.

The benchmark question

The Rs195 benchmark deserves closer attention. At that rate, 100,000 views work out to Rs 19,500.

Reported YouTube earnings for the same view count run from Rs5,000 to Rs20,000. The benchmark therefore sits at the very top of the range. If it is used to assess income, creators with lower earning rates could be taxed on more than they received.

The available reporting does not say how the FBR applies the benchmark. It could be a floor for assessment or a reference for audits. The difference changes who is affected, and it is the first point the FBR should clarify.

The formalization argument

Creators make their case as Pakistan’s IT exports reach a record $4.6 billion. Platform ad revenue counts as an IT service export, so creators contribute to that figure whenever a payment arrives from abroad.

That link gives the FBR a practical reason to listen. A tax that feels unfair gives creators a reason to avoid banks. They can ask platforms to pay through other channels or leave money abroad. Each of those choices reduces the revenue the FBR can collect and weakens the export numbers the government promotes.

A fairer framework could do the opposite. If creators believe the system counts their real costs, more of them may route earnings through banks and file returns.

The FBR has not responded to the demand in the available reporting. Two changes would settle most of the dispute: a higher or more flexible expense ceiling and a plain explanation of the per-view benchmark.

Pakistan wants more digital exports, and creators are some of the most visible earners of foreign currency. How the FBR treats them will show whether the state sees them as a tax base to be collected from or an industry to be grown.