PRA to tax video streaming, social media platforms

Aims to enhance revenue stream, achieve Rs240 billion for the fiscal year

LAHORE:

The Punjab Revenue Authority (PRA) has announced its decision to impose taxes on all video streaming and social media platforms operating within the province’s territory, starting from July 1, 2023. Additionally, sales tax will now be levied on all e-commerce operators. The move comes as part of the authority’s efforts to enhance its revenue stream and achieve the target of Rs240 billion for the current fiscal year.

Speaking to The Express Tribune, PRA, Additional Commissioner HQ, Sara Hayat said, “We are just waiting for the gazette notification before we initiate the taxation of these services. All necessary legislative work has already been completed.”

Under the new taxation regime, the authority will impose a 5% tax, with the State Bank of Pakistan (SBP) acting as the collection agent. Hayat said that, “According to the SBP, Pakistanis generated around Rs100 billion worth of e-commerce business in 2022. We expect to generate between Rs8 to Rs10 billion in revenue through this taxation.”

In the previous fiscal year, the PRA managed to generate Rs200.4 billion, an increase from Rs150.5 billion in the fiscal year 2021-2022. Currently, the authority is taxing 70 services through its Commissionerate offices in eight cities. Hayat mentioned that the authority plans to establish district offices in major cities of Punjab to further streamline its operations and expand its tax collection scope.

The PRA recently concluded discussions with the Defence Housing Authority (DHA) and both parties agreed to sign a memorandum of understanding (MoU) to tax real-estate and allied sectors. This strategic step, once implemented, is expected to significantly increase tax revenue for the PRA.

Currently, the authority generates revenue from 24 main sectors, with withholding agents being the primary contributors. In the fiscal year 2022-2023, withholding agents generated Rs48 billion compared to Rs38 billion in the previous fiscal year. The telecommunication services sector contributed Rs38 billion, up from Rs31 billion, while the insurance sector generated Rs25 billion, an increase from Rs19 billion.

Other sectors contributing to the revenue include courier services (Rs8 billion), franchise services (Rs7.3 billion), contractual execution of work or supplies (Rs6.3 billion), restaurants and cafes (Rs5.4 billion), construction services (Rs4.5 billion), manpower and recruitment agents (Rs4.2 billion), inter-city carriage of goods by rail or road (Rs3.5 billion), transport of goods through pipelines or conduits (Rs3.3 billion), and services provided by port operators (Rs3.2 billion).

The PRA also generated revenue from technical scientific and engineering consultants (Rs2.9 billion), security agencies (Rs2.9 billion), IT-enabled or IT-based services (Rs2.7 billion), hotels (Rs2.6 billion), commission agents (Rs2.2 billion), mining of minerals and oil & gas services (Rs1.6 billion), property developers and promoters (Rs1.2 billion), and cargo services (Rs1.1 billion).

Additionally, business support services and ride-hailing services contributed Rs0.95 billion and Rs0.89 million, respectively. All other services collectively added Rs24.6 billion to the PRA’s revenue in the fiscal year 2022-2023, compared to Rs11.7 billion in the previous fiscal year.

Published in The Express Tribune, July 14^th, 2023.

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