The Federal Board of Revenue (FBR) has issued a notice to Netflix, demanding the payment of over Rs200 million (approximately $700,000) worth of income tax, ProPakistani reported.

The additional commissioner of the corporate tax office in Islamabad has generated tax demands for Netflix covering two different tax years. This is pursuant to Section 6 of Pakistan’s Income Tax Ordinance of 2001, which allows the taxation of non-resident companies providing digital services to Pakistani consumers.

The streaming giant offers a range of subscription plans in the country, with monthly fees ranging from Rs250 to Rs1,100.

Netflix reported revenues of Rs1.3 billion from its operations in Pakistan during the 2021 tax year alone, the report said.

It appears that Netflix, along with some other companies, has been providing digital services to Pakistani customers without establishing a physical presence in the country. The FBR initially served the tax notice to Netflix’s Singapore office, though the company has also set up an office in the Netherlands in recent years.

The government introduced Section 6 in the Income Tax Ordinance to ensure that non-resident entities receiving income from Pakistan-source royalties, fees for digital services, or technical services are subject to taxation. But some companies have allegedly attempted to exploit double taxation agreements to avoid paying the required taxes.