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Public finance

IT Sector Calls for Clarity on Taxation and Support to Sustain Export Growth

Strategic Insights

— 1 min read

The Pakistani IT industry has set ambitious targets to increase exports to $25 billion by 2029, but stakeholders have expressed concerns about existing taxation policies and lack of clarity on tax exemptions. Senior Vice Chairman of P@SHA Muhammad Umair Nizam urged the government to extend the final tax regime for IT companies and freelancers, and abolish taxes on debit card transactions linked to foreign currency accounts. Industry representatives also called for the allocation of funds for local production of IT devices and accessories, and reduction of taxes on desktop components to promote local assembly.

Key Takeaways:

  • The IT sector has maintained double-digit export growth and is expected to hit $4 billion by the end of the current financial year.
  • Stakeholders have called for the continuation of existing taxation policies to sustain domestic expansion and boost foreign exchange earnings.
  • The government has been urged to provide clarity regarding tax exemptions for IT companies and withdraw unnecessary or newly imposed taxes.
  • Industry representatives have recommended extending the final tax regime for IT companies and freelancers for the next 10 years to attract foreign investment and accelerate export growth.
  • The IT sector is facing a brain drain due to unfavorable local income tax policies, and stakeholders have called for better support and policies to retain talent.
  • A significant portion of the government's IT budget is spent on importing laptops, computers, and components, exacerbating foreign exchange outflows.
  • Industry representatives have welcomed the allocation of funds for human resource development and skills training, but have expressed concerns about the lack of meaningful measures to support local companies and exporters.

Statistics:

  • The IT sector is expected to hit $4 billion in exports by the end of the current financial year.
  • The government has allocated Rs29.9 billion for ICT development and Rs13.5 billion for tech parks, cybersecurity, and semiconductor training.
  • Over $1.6 billion of earnings have been generated by freelancers through training programmes like e-Rozgaar, DigiSkills, and the National Freelance Training Program (NFTP).
  • Pakistan aims to increase exports to $25 billion by 2029.

Sources:

  • [Source: Lahore Business Report]
  • [Source: Ministry of Finance, Government of Pakistan]
  • [Source: P@SHA]

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