The Federal Board of Revenue (FBR) of Pakistan is seeking over Rs. 200 million in income tax from streaming giant Netflix. This move comes amid increased scrutiny of offshore digital services operating in the country.
Key Points:
- FBR claims Netflix owes taxes on revenue generated from Pakistani subscribers.
- Netflix reportedly declared Rs. 1.3 billion in revenue from Pakistan in 2021 alone.
- The tax demand is based on Section 6 of the Income Tax Ordinance, 2001, which targets non-resident companies providing digital services in Pakistan.
- Netflix, headquartered in Singapore with an office in the Netherlands, reportedly argues Double Taxation Agreements (DTA) to avoid these taxes.
- DTAs are designed to prevent the same income from being taxed twice by different countries.
- The Sindh Revenue Board previously imposed taxes on similar services, and the FBR is now following suit.
- Netflix reportedly challenged the FBR’s assessment through a tax consultant but was unsuccessful.
What it Means:
This case highlights Pakistan’s efforts to collect taxes from foreign digital service providers operating within its borders. The outcome could set a precedent for how other offshore digital companies are taxed in Pakistan.
