The Sindh Revenue Board (SRB) has mandated a 13% provincial sales tax on advertisement services via banks starting from October 1, 2023. This tax applies to payments routed through banks to non-resident service providers such as Facebook, Google, and others.
Authorities disclosed that this tax encompasses all transaction modes, including credit card payments, channeling 13% provincial sales tax on advertisement services.
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According to informed sources, banks in Pakistan have initiated a 16% provisional sales tax levy on credit card spending for ads on platforms like Facebook. This additional charge accompanies the existing 0.8% DCC Merchant Fee and 16% FED on DCC Merchant Fee.
For local transactions, an expense of Rs. 100 on ads escalates to Rs. 116.93. Cross-border payments attract 4% forex charges and 5% AWT fees. This cost factor becomes crucial for performance marketers calculating ROI/ROAS. Brands face an additional 9% WHT and 15% GST (ICT), totaling Rs. 146.57.
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The challenge persists as the Government of Pakistan struggles to tax major tech companies operating from abroad, except ByteDance, which accepts local advertising payments. Consequently, local media agencies and freelancers bear the brunt of heavy FBR taxation.
Sources indicated that scheduled banks are now deemed collection agents by the SRB for sales tax deduction on advertisement services. They have initiated the collection of sales tax from service recipients based in Sindh, acting as withholding agents as per SRB’s 2023 rules effective October 1, 2023.
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The 13% sales tax imposition encompasses advertisement services payments funneled through banks to non-resident service providers, aligning with the SRB’s directives.
