The Federal Board of Revenue (FBR) has issued a notice to Netflix for the recovery of over Rs. 200 million in income tax, according to official sources.
Netflix, a global streaming service offering a wide array of TV shows, movies, anime, and documentaries, provides subscription plans in Pakistan ranging from Rs. 250 to Rs. 1,100 per month.
Sources revealed that the Additional Commissioner of the Chief Tax Office (CTO) in Islamabad has generated a tax demand exceeding Rs. 200 million for two different fiscal years under section 6 of the Income Tax Ordinance (ITO) 2001. Netflix reported Rs. 1.3 billion in revenue in Pakistan for the tax year 2021 alone.
It was highlighted that Netflix, along with other companies, offers offshore digital services without physical offices in Pakistan. The Pakistani government introduced section 6 in the Income Tax Ordinance 2001 to ensure non-resident entities receiving Pakistan-source royalty or fees for offshore digital services or technical services are taxed.
Previously, the Sindh Revenue Board had been taxing non-residents for offshore services, and now the FBR is also imposing income taxes on these entities. Netflix’s tax consultant challenged the assessment orders before the Commissioner Appeal FBR, but the Commissioner upheld the FBR’s decision.