The Federal Board of Income (FBR) is making efforts to increase its tax web to regulate the fiscal deficit. On this regard, the board just lately issued a discover to Netflix, in search of restoration of over Rs. 200 million in revenue tax. The Extra Commissioner CTO Islamabad generated this demand below Part 6 of the Earnings Tax Ordinance (ITO), 2001 for 2 completely different years.
Since Netflix like different tech firms doesn’t have places of work in Pakistan, the discover was despatched to Netflix’s Singapore workplace. Netflix gives its Pakistani viewers numerous plans starting from Rs. 250 to Rs. 1,100 per thirty days. In fiscal 2021, the corporate reported a staggering turnover of Rs. 1.3 billion in Pakistan alone. Nevertheless, the brand new tax invoice might result in a rise within the costs of Netflix subscriptions.
Furthermore, the sources say that offshore digital service suppliers are utilizing Double Taxation Agreements (DTA) to keep away from taxes. DTAs are contracts entered into between two international locations to stop the identical revenue from being taxed twice.
Part 6 of the Earnings Tax Ordinance 2001 was enacted to make sure that the tax shall be levied on any non-resident who receives royalties from Pakistan for offshore digital providers or charges for technical providers.
Then again, Netflix, via its tax advisor, challenged the evaluation orders earlier than the Commissioner Enchantment FBR. Nevertheless, the Commissioner dominated in favor of the FBR.
In conclusion, this improvement highlights the Pakistani authorities’s rising concentrate on taxing digital service suppliers to increase the nation’s tax web.
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