The overwhelming success of the fundraising concerts featuring world-renowned singer Rahat Fateh Ali Khan in Karachi and Hyderabad under the Premnagar Concert Series surpassed all my expectations and set new benchmarks. Thousands of people attended these vibrant musical gatherings and learned about the humanitarian projects underway in Premnagar, also known as the Land of Love, located in the remote area of Tharparkar.
Undoubtedly, social media influencers played a pivotal role in this historic achievement. For more than a month, Premnagar remained a top trend across major social media platforms, as numerous videos related to the concerts went viral, reaching millions of viewers. This experience reinforced my belief that in today’s digital age, social media is no longer merely a tool for communication and entertainment; it has evolved into a significant economic tool.
In this situation, the government of Pakistan has introduced a 5.0 per cent tax on the income of social media influencers. Once approved by parliament, Pakistani banks will be legally authorised to deduct withholding tax from certain social media-related earnings received through local banking channels.
Globally, there is indeed a growing trend toward regulating and taxing the digital economy. In the US, YouTubers and content creators are required to pay federal and state taxes on their business income. In the UK, online creators must register as self-employed individuals and pay income tax on their earnings. Australia and Canada similarly include digital creators within their tax systems.
Similarly, Indian tax authorities have expanded their oversight of the influencer economy by treating not only cash payments but, in certain circumstances, even free products and gifts received from brands as taxable benefits. In the UAE, although personal income tax remains limited, social media influencers are often required to obtain business licenses and comply with regulatory requirements.
Yet there is another side to the international experience that deserves equal attention. In many developed economies, governments do not simply collect taxes; they also provide meaningful support and incentives to taxpayers. In many countries, content creators can claim legitimate business expenses, including video production costs, studio rent, camera equipment, internet charges, software subscriptions and travel expenses, as tax deductions. This significantly reduces their effective tax burden and enables them to reinvest in their businesses’ growth.
In my view, Pakistan’s social media influencers are already making a meaningful contribution to the national economy. A growing number of Pakistani YouTubers, freelancers and digital creators earn income in US dollars through global platforms. When these earnings are transferred through Pakistan’s banking system and converted into local currency, the benefits extend beyond individual creators. Such inflows strengthen the country’s foreign exchange reserves and contribute positively to the national economy.
Nevertheless, I currently sense considerable anxiety among social media influencers regarding the government’s proposed policy. They argued that Pakistan’s digital economy is still in its early stages of development. They are of the view that imposing additional taxes at this point could discourage young entrepreneurs from building online careers without substantial government support. Taxing influencers too heavily at this stage of struggle could undermine the growth of an industry that has become a major source of self-employment for the country’s youth.
If taxation and regulatory pressures become excessive, some creators may choose to retain their earnings abroad through virtual bank accounts, digital wallets or foreign financial platforms. In such a scenario, the government may fail not only to achieve its anticipated revenue targets but Pakistan could simultaneously lose valuable foreign exchange inflows that currently enter the country through formal banking channels.
This is why our policymakers should carefully balance taxation with incentives. Before imposing stricter tax measures, the government should introduce attractive facilities and support mechanisms for digital entrepreneurs. Legitimate recognition, simplified regulations, improved banking services for digital earners and reasonable tax incentives would help ensure that Pakistan’s talented young creators continue to flourish online.
The writer is a member of the National Assembly and patron-in-chief of the Pakistan Hindu Council. He tweets/posts @RVankwani
