Islamabad, Pakistan – Netflix users in Pakistan are facing increased costs as banks begin implementing new taxes on subscriptions to the popular streaming service. The Sindh Revenue Board (SRB) has introduced additional levies, supplementing the existing provincial sales tax.
The new tax structure includes:
- 3% Sales Tax on IT Services for all Netflix subscriptions paid via debit or credit cards
- 5% Advance Tax on International Transactions for tax filers, rising to 10% for non-filers
- 4% Card Transaction Charges
- Potential Federal Excise Duty
Banks are now acting as collection agents for the SRB, enforcing these taxes in accordance with the Sindh Sales Tax Special Procedure (Tax on Specified Services) Rules, 2023. This legislation specifically targets digital services like Netflix.
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The streaming giant has acknowledged that subscribers may face location-based tax increases. This aligns with the recent Finance Bill 2024, which aims to tax tech companies generating income in Pakistan through digital means.
These new taxes will likely result in higher subscription fees for consumers. The Pakistani government is also intensifying efforts to tax offshore digital service providers, arguing that some companies have been using Double Taxation Agreements (DTAs) to avoid paying taxes in Pakistan. New regulations seek to ensure all non-resident companies providing digital services to Pakistan contribute their fair share of taxes.
Subscribers are advised to anticipate these additional charges on their next Netflix bill.
