FBR eyes Rs195 tax per 1,000 YouTube views

The government has proposed new amendments to hit non-resident Pakistani YouTubers who were earning hefty amounts by selling their content in Pakistan, seeking to recover Rs195 per 1,000 views on videos.

The proposed income tax rate translates into 16% to 66% of every cent earned from Pakistan, depending upon the region and the price for every cent or dollar earned against each 1,000 views of a video. The Federal Board of Revenue (FBR) has proposed the amendments in the Income Tax Rules and gave seven days for objections to these amendments. These special procedures have been notified by exercising special powers available to Finance Minister Muhammad Aurangzeb to change these rules.

The law states that the FBR with the approval of the minister-in-charge (finance minister) may, by notification in the official gazette, prescribe special procedure for scope and payment of tax, record keeping, filing of return and assessment in respect of small businesses, construction businesses, medical practitioners, hospitals, educational institutions and any other sector specified by the FBR with the approval of the minister-in-charge, in such cities or territories, as may be specified.

The FBR has proposed that it will charge Rs195 "per 1,000 views on the video shared on YouTube. For the purpose of this special procedure, it shall be taken as Rs195 and is subject to revision from time to time." At present, the revenue per mile (per thousand) usually ranges from $1 to $3 but can go as high as $9, if the audience is in the US and Canada.

The Rs195 per 1,000 views from income earned from Pakistan could translate from 16% to 66% rate. Such measure cannot be enforced without the active support of the YouTube management.

The FBR stated that the proposed special procedure will only apply to computation of income of non-resident persons earning income from remunerative social media content viewed in Pakistan. "Every non-resident person deriving income from interaction with users in Pakistan through social media platforms to the extent such income constitutes Pakistan-source income," state these proposed rules.

This would impact only those non-resident Pakistanis who are sitting abroad, mainly in the US, Canada or the United Kingdom, producing content on Pakistan's politics and economy, which is viewed in Pakistan. There are a handful of prominent non-resident Pakistanis who would be affected by these special procedures. The FBR said these rules would be applicable on systemic and continuous soliciting of business activities or engaging in interaction through digital means only to those YouTubers who have over 50,000 users a year or 12,250 in a quarter.

"The threshold for number of users for the purposes of these rules will be over exceeding 50,000 users during a tax year or 12,250 users during a quarter," read these rules. The FBR said the minimum income of a person from remunerative social media content shall be calculated on the basis of total remuneration received from social media content and total expenses made, up to maximum of 30% of total revenue. The total remuneration received by a person from remunerative social media content shall be the higher of revenue per mille multiplied by average number of views per content multiplied by total number of posts during the year, or the actual remuneration received by the person from the social media content whether received in cash or kind. Every YouTuber falling under this new special procedure will pay advance income tax. The declaration of such income shall be made in a special part of income tax return for each tax year.

The FBR said where the declaration of income is less than the amount calculated, the relevant inland revenues commissioner may rectify this error of omission or commission in the return and proceed to recover the amount due from the taxpayer as per the provisions of the Income Tax Ordinance, 2001.