Starting on October 1, 2023, all banks ordered by the Sindh Revenue Board (SRB) to deduct 13% of the provincial sales tax from advertising services.
SRB Orders Banks to Cut 13% Tax on Ads Payments Done Through Credit Card
Senior government representatives announced that sales tax will impose on advertising services for payments made to non-resident service providers such as Facebook, Google, and others through bank transfers.
Any payment method—including credit card payments—made through banks will subject to the 13% provincial sales tax on advertising services.
According to a person with knowledge of the situation, banks in Pakistan begun taxing an additional 16% provisional sales tax on credit card purchases made for advertising (such as Facebook advertisements).
The 16% FED on DCC Merchant Fee and the 0.8% DCC Merchant Fee are additional fees.
The Criteria
“So, if you’re spending Rs. 100 on ads, you end up paying Rs. 116.93 in case of local payments. For cross-border payments, 4 percent forex charges and 5 percent AWT fees are also applied.
If you’re a performance marketer, consider this cost while calculating your ROI/ROAS. From the brands’ perspective, they have to pay 9 percent WHT and 15 percent GST (ICT) over and above (a total of Rs. 146.57),” he explained.
He added that since all of the major tech companies—aside from ByteDance, which takes payments for advertising in local accounts—operate from overseas, the Pakistani government is powerless to impose taxes on them.
Ultimately, the high taxes levied by the FBR hurting freelancers and local media buying companies.
Designated Banks Job
According to sources, the SRB designated all scheduled banks as collection agents for the purpose of deducting sales tax from the cost of advertising services.
The beneficiaries of stated services, who are based in the province of Sindh, are now subject to sales tax charges and collections by the banks.
The SRB designated banks as withholding agents in this regard.
According to the SRB’s 2023 regulations, starting on October 1, 2023, advertising services for which payment is made through banks via any method for payments to any service provider who is not based in Pakistan will henceforth subject to a 13% sales tax, officials said.
To read our blog on “Sindh Government reduces IT service Tax rates, Notification issued,” click here.
