FBR Directs Netflix to Pay Rs. 200 Million in Income Tax
FBR Directs Netflix to Pay Over Rs. 200 Million in Income Tax
Netflix, a renowned streaming service offering a vast array of content, has received a notice from the Federal Board of Revenue (FBR) for the recovery of more than Rs. 200 million in income tax.
The streaming giant offers various subscription plans, ranging from Rs. 250 to Rs. 1,100 per month, catering to viewers worldwide, including those in Pakistan.
As per sources, the Additional Commissioner of CTO Islamabad has issued a demand for over Rs. 200 million for two different fiscal years under section 6 of the Income Tax Ordinance, 2001.
Reportedly, Netflix declared revenue of Rs. 1.3 billion during the tax year 2021 in Pakistan alone.
It has come to light that Netflix, along with other similar companies, provides offshore digital services without establishing physical offices in Pakistan.
FBR has sent notices to Netflix’s Singapore office and noted its establishment of an office in the Netherlands.
These companies are allegedly exploiting Double Taxation Agreements (DTAs) to evade taxes.
Section 6 of the Income Tax Ordinance 2001 mandates non-resident individuals receiving Pakistan-source royalty fees for offshore digital services to pay income tax.
While the Sindh Revenue Board was already taxing non-residents for offshore services, the FBR has now begun imposing income tax on non-residents as well.
Despite challenging the assessment orders before the Commissioner Appeal FBR, Netflix’s tax consultant has failed to overturn the decision in favor of the FBR.
