The Pakistani government is looking to the tax tech giants earning revenue in Pakistan. FBR has proposed a 5% tax on digital revenues earned by the US tech giants including Google, Amazon, Facebook, etc. and also plans to bring the offshore companies into the tax boundaries.
Reportedly, this an apparent attempt by the country to tax the Chinese earnings from Pakistan, reports The Express Tribune.
The tax measures are the part of the proposed Budget 2018-19 which is still under discussion by the Senate Committee on Finance.
Dr. Mohammad Iqbal, Member Inland Revenue Policy of the FBR while briefing the standing committee revealed that the government is looking to tax the digital advertising space along with hosting and maintenance of websites to tax the revenues of tech companies like Google and Yahoo
If the government passes this proposal, the tech companies will have to pay 5% tax on the money they have earned from the digital advertising and user data of Pakistanis irrespective of the fact whether they have brick and mortar presence in the companies. This proposal is aimed at capturing companies like Uber and Airbnb whose businesses are run by user data.
The standing committee has rejected the FBR’s proposal to tax tech giants but it will have only menial effect as the Senate cannot vote in case of the Finance Bill. The new proposal by FBR will be a bitter pill to swallow as it will easily garner more hatred than support from the government.
Dr Musaddiq Malik, member of the standing committee and spokesman of the prime minister while talking to Tribune called this proposal “anti-investment and anti-capital formulation”
According to Dr. Iqbal, Pakistan should tax the companies who are earning billions of rupees from our country in the name of foreign direct investment and revealed that the money repatriated from us much higher than what they are bringing in Pakistan.