Starting from October 1, 2023, the Sindh Revenue Board (SRB) has mandated that all banks deduct a 13 percent provincial sales tax on advertising services. According to senior government officials, this tax applies to payments made through banks for advertising services to non-resident service providers like Facebook and Google. The 13 percent provincial sales tax on advertisement services is applicable to transactions via banks, including Advertising Payments payments.

READ MORE:

Punjab Removes Uniform Requirement for Students in Private and Government Schools

Insiders have revealed that Pakistani banks are currently imposing an additional 16 percent provisional sales tax on credit card spending for advertisements, such as Facebook ads. This is in addition to the 0.8 percent DCC Merchant Fee and a 16 percent FED on the DCC Merchant Fee. For local payments, this results in a total of Rs. 116.93 for every Rs. 100 spent on ads. Cross-border payments incur additional charges, including a 4 percent forex fee and a 5 percent AWT fee. Performance marketers are advised to factor in these costs when calculating ROI/ROAS. Brands, on the other hand, are burdened with a 9 percent WHT and a 15 percent GST (ICT), totaling Rs. 146.57.

The government’s challenge in taxing major tech companies operating from abroad, except for ByteDance, which accepts advertising payments in local accounts, has led to increased taxation on local media buying agencies and freelancers by the Federal Board of Revenue (FBR).

Sources indicate that the SRB has designated all scheduled banks as collection agents for deducting sales tax on advertisement services. These banks are now charging and collecting sales tax from service recipients located in the province of Sindh, acting as withholding agents as per the SRB’s rules of 2023. The 13 percent sales tax is now applicable to advertisement services, with payment made through banks, using any means, for the transfer of payments to non-resident service providers, effective from October 1, 2023.

LEAVE A REPLY

Please enter your comment!
Please enter your name here