Retailers, freelancers decry taxes on digital services

Say thousands of businesses, startups rely on international digital services, platforms

LAHORE:

The Chainstore Association of Pakistan (CAP) and over 100 businesses and freelancers have expressed grave concerns over the increasing restrictions and taxes on payments for international digital services through banking channels, including debit and credit cards and commercial remittances.

In addition, the Federal Board of Revenue (FBR) has raised withholding tax (WHT) by 400% from 1% to 5% for active taxpayers on international transactions via debit and credit cards. “While this tax may be adjustable at the time of annual tax return filing, it temporarily increases the cost per transaction and funding requirements to make payments for commercial purposes,” said a joint statement issued on Saturday.

Similarly, 16% federal excise duty (FED) on bank charges also adds to the cost of such transactions.

Read GSMA proposes cut in telecom taxes

The trade body for organised retailers said that the recent measures taken by the State Bank of Pakistan (SBP) and the FBR were aimed at restricting the outflow of foreign currency.

“However, thousands of freelancers, businesses and startups in Pakistan heavily rely on international digital services and platforms for various commercial pursuits, and earn foreign exchange through social media marketing, search engine advertising, domain registration and website hosting”, it pointed out.

The frequency of payments for such services varies from multiple times in a month to once a year, depending on the type of service.

Published in The Express Tribune, August 27^th, 2023.

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