In a recent development, Pakistani banks have begun imposing additional charges on Netflix subscriptions following new tax regulations set by the Sindh Revenue Board (SRB). These charges are in addition to the existing provincial sales tax, potentially increasing costs for subscribers.
The new fee structure includes:
- 3% Sales Tax on IT Services for all Netflix subscriptions paid via debit or credit cards
- 5% Advance Tax on International Transactions for tax filers, rising to 10% for non-filers
- 4% Card Transaction Charges from banks
- A potential Federal Excise Duty
Banks are now acting as agents for the SRB in collecting these taxes, implementing the Sindh Sales Tax Special Procedure (Tax on Specified Services) Rules, 2023. This legislation targets digital services like Netflix.
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Netflix has acknowledged that users may incur extra taxes based on their location. This aligns with the Finance Bill 2024, which aims to tax tech companies earning income in Pakistan through digital means.
These new taxes will likely result in higher subscription fees for consumers. The Pakistani government is also focusing on taxing offshore digital services, arguing that some companies use Double Taxation Agreements (DTAs) to avoid paying taxes in Pakistan. New regulations seek to ensure non-resident companies providing digital services to Pakistan contribute their fair share of taxes.
Subscribers should expect these additional charges on their next Netflix bill.
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