Google, Facebook to face 15% tax for running local ads

The central bank has asked all commercial banks to deduct 15% withholding tax if any local company makes payment to tech giants like Google and Facebook through their authorisied dealer (AD) branch dealing with foreign currency transactions against advertisement. 

The section 56 of the Income Tax Ordinance provides clarification regarding Digital Marketing and Broadcast Advertising.

It stated that any advertising campaign or promotion of any content on social media or websites using the internet will be considered Digital Marketing. 

Besides, any advertisement broadcast on any foreign television or radio channel will be considered as Broadcast Advertising and the company concerned will have to pay tax at the rate of 20%.

In view of this, on Monday, the central bank notified the commercial banks to deduct withholding tax while sending remittances in favour of foreign institutions for the above mentioned services.

A central bank official of the department concerned said, "In many cases, while sending remittances to foreign organisations, there has always been a confusion regarding tax rates of Digital Marketing and Broadcast Advertising, so the issue has now been clarified."