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Express Tribune
11-06-2025
- Business
- Express Tribune
'Tax physical retailers, not budding e-commerce'
Listen to article Tech experts have pleaded for the withdrawal of taxes on the IT sector, digital services, and e-commerce to maintain momentum in digital transformation and economic documentation. They urged the government to support sectors that bring in foreign exchange and investment, generate employment, and contribute tax revenue, rather than restricting growth through discouraging tax measures. However, they praised the government for allocating funds for IT infrastructure development and human resource training. Pakistan Freelancers Association (PAFLA) Chairman and Executive Member of Digital Nation Pakistan, Ibrahim Amin, highlighted the importance of policy continuity. He suggested that the government extend the 0.25% Final Tax Regime for freelancers and IT exporters until 2035 to boost confidence, encourage compliance, and enhance remittances. He said the proposed 5% tax on social media advertising could indirectly affect the income of IT companies and freelancers, which may negatively impact IT foreign exchange inflows. "As per estimates, IT exports will surge to over $3.5-$4 billion, and remittances from freelancers will increase to more than $500 million by the end of the current financial year. If we want to sustain this growth, the government, along with stakeholders, should support these sectors with tax exemptions and incentives," he said. The services sector has shown steady growth in IT and e-commerce. In May 2025 alone, 718 new companies were registered in these sectors, according to data released by the Securities and Exchange Commission of Pakistan (SECP). Saad Shah, CEO of Ucaaza retail chain and e-commerce storesaid the introduction of new taxes on e-commerce customers and vendors could slow down the sector's growth and its contribution to the broader economy, including digitisation and documentation. He noted that e-commerce still holds an insignificant share of the overall retail market, but its rapid expansion is attracting both local and foreign investment. However, the new taxes will shake the confidence of major stakeholders in Pakistan's e-commerce ecosystem. He pointed out that a significant segment of e-commerce contributes tax revenues, unlike the wider retail sector comprising shopping centres and wholesale markets. He added that instead of broadening the tax base, the government is overburdening existing taxpayers. The government has introduced the Digital Presence Proceeds Tax Act, 2025, in the finance bill. It targets entities with significant digital sales in Pakistan conducted through foreign-registered companies. Under this act, a 5% tax will be levied on the invoiced amount for goods and services. Additionally, the withholding tax rate on online and e-commerce transactions has increased from 1% to 2%, while an 18% GST has been imposed on goods purchased via local e-commerce vendors. Mehwish Salman Ali, a tech expert and member of the P@SHA committee, urged the government to strengthen the IT and digital business ecosystem through favourable policies, including tax exemptions and incentives. She warned that if government policies discourage investors and business owners, job creation would be affected, and ultimately the fruits of training new talent would not be reaped at an optimal level. She praised the allocation of Rs4.3 billion for the capacity building and skill development of 161,500 students, including 56,000 in IT-related fields. The IT industry is facing a serious shortage of human resources, and investing in youth to equip them with emerging skills is crucial, she added.
Express Tribune
09-06-2025
- Business
- Express Tribune
Experts warn against taxing freelancers, content creators
Pakistan's freelance community has voiced strong opposition to proposed taxation measures in the upcoming federal budget targeting freelancers and content creatorsincluding YouTubers, vloggers, and TikTokersurging the government to prioritise foreign exchange inflows and economic inclusion instead. Pakistan Freelancers Association (PAFLA) Chairman Ibrahim Amin said the government must avoid creating an impression that a large number of content creators will be brought under the tax net, as this could discourage struggling freelancers and budding digital creators. However, he suggested that the Federal Board of Revenue (FBR) could consider taxing a select group of high-earning entertainment content creators with substantial followings and revenues. Amin urged the government to categorise content creators carefully, exempting those who provide educational content and skills training to millions of subscribers in Pakistan and abroad from any new tax burden. He pointed out that both the public and private sectors have invested heavily in developing freelancers and digital creators, who have used these skills to support their families and attract much-needed foreign exchange into the country. Despite challenges such as frequent internet disruptions and electricity outages, freelancers' income surged to $400 million during the nine months of FY25, according to the latest Pakistan Economic Survey. Amin pointed out that most freelancers already pay taxes on every transaction and also bear deductions charged by freelancing platforms and payment gateways for transaction services. Estimates suggest there are around 2.37 million freelancers in Pakistan, making it the fifth-largest freelance workforce globally. "If we double the size of this community, annual foreign exchange inflows could exceed the $1 billion mark," said the PAFLA chief. Hisham Sarwar, a social media influencer and a well-known digital skills and freelancing trainer, said the government must support the freelancing sector's efforts to bring foreign exchange into Pakistan rather than introduce measures that may create fear and discourage digital workers. Citing Bangladesh as an example, Sarwar noted that tax holidays and cashback incentives for its IT sector and freelancers have driven rapid growth. Pakistan, he argued, should strengthen its high-potential IT sector similarly to boost exports to $10 billion per annum. Sarwar described Pakistan's freelancing market as limited but fast-growing, thanks to the talent and creativity of its youth. The rising adoption of artificial intelligence (AI) tools, he said, would likely attract more skilled individuals to the IT industry, potentially revolutionising the services and product sectors and delivering greater foreign exchange earnings than the proposed tax revenues. He warned the government against imposing new taxes inspired by the lifestyles of a small fractionless than 1%of luxury-living vloggers. Such measures, he said, would harm the entire industry. Pakistan Software Houses Association (P@SHA) Senior Vice Chairman Muhammad Umair Nizam said the IT sector has already proven its ability to attract valuable foreign exchange and foreign investment, aided by government incentives, tax holidays, and aggressive marketing drives. Nizam stressed that expanding IT exports would help reduce the country's current account deficit while empowering the youth to improve their living standards through employment in the IT and freelancing sectors. He also reiterated his call for an extension of the Final Tax Regime (FTR) for freelancers and IT exporters by up to 10 years and urged the government to allocate funds in the budget for capacity building of IT professionals and students. During July-March FY2025, IT and Information Technology Enabled Services (ITeS) achieved a trade surplus of $2.429 million, a 21.6% increase from $1.997 million last year, despite frequent internet disruptions during the fiscal year. The Pakistan Economic Survey 2024-25 highlighted other key indicators for the IT and telecommunications sector, including $2.825 million in IT exports, $2.429 million in trade surplus for IT and ITeS, $400 million in freelancers' remittances, Rs803 billion in telecom revenues, 147.2 million broadband subscribers, and a total of 199.9 million telecom subscribers.
Express Tribune
28-05-2025
- Business
- Express Tribune
IT sector seeks policy continuity
Pakistan Freelancers Association Chairman Ibrahim Amin cautioned against increasing tax rates on freelancers, who already pay taxes on every transaction in addition to fees charged by freelancing platforms and payment gateway service providers. photo: REUTERS Listen to article Key stakeholders of the IT industry have urged the government to continue reforms and extend incentives for the significant growth of the IT sector and its allied fields to enhance export earnings and create jobs for youth, in line with the objectives of the futuristic "Uraan Pakistan" economic plan. They called for incorporating their recommendations in the upcoming federal budget 2025-26 to enable the IT sector to grow faster, generate more employment opportunities, and contribute more effectively to strengthening the national economy. They also stressed the need for continuity of existing policies and resolution of regulatory and tax-related challenges in the finance bill for 2025-26, particularly for the IT industry and freelancers, to help accelerate sectoral growth and development. Khushnood Aftab, Convener of the IT Committee at the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), recommended that the government reduce import duties on essential hardware components such as RAM, SSDs, motherboards, batteries, and displays. This would support the local assembly of fully built imported devices like laptops, desktops, and tablets, fostering local value addition and attracting investment in domestic production facilities. He noted that increased support for the localisation of computer devices and hardware accessories could help Pakistan conserve foreign exchange, create skilled jobs, and position itself as a competitive exporter in regional markets. The locally branded IT hardware sector, he added, deserves focused attention as it directly aligns with the "Made in Pakistan" initiative and the broader Digital Pakistan vision. Furthermore, he emphasised the urgent need for the fair inclusion of local brands in government procurement, which would encourage scale, improve quality, and support domestic industry without compromising standards. Pakistan must also prepare for the growing demand for AI-integrated hardware and edge computing devices, he said, which could be achieved through the introduction of targeted Research and Development (R&D) tax credits and innovation grants to support companies working on emerging technologies within the country, said Khushnood Aftab, who is also Chairman Viper Group. Muhammad Umair Nizam, Senior Vice Chairman of the Pakistan Software Houses Association (P@SHA), said the IT sector is a key driver of economic growth, job creation, and foreign investment. He stressed that extending the Final Tax Regime (FTR) for the next decade would provide the policy stability necessary to encourage reinvestment and help Pakistan maintain its competitive edge in global markets. He also urged the government to harmonise the definitions of IT and Information Technology Enabled Services (ITeS) across federal and provincial tax laws to ensure consistency, eliminate jurisdictional ambiguities, and reduce compliance burdens. A unified framework, he said, would enhance investor confidence, streamline taxation, and promote sectoral growth by creating a predictable regulatory environmentultimately strengthening Pakistan's digital economy and competitiveness. Equally important, he said, is reducing income tax for salaried IT professionals, which would help retain top talent and mitigate the ongoing brain drain. Pakistan Freelancers Association Chairman Ibrahim Amin cautioned against increasing tax rates on freelancers, who already pay taxes on every transaction in addition to fees charged by freelancing platforms and payment gateway service providers. He recommended that the government exempt freelancers and IT companies from withholding tax (WHT) on international transactions under the Exporters' Special Foreign Currency Account (ESFCA) in the upcoming finance bill, following the concurrence of the Ministry of Finance and Revenue. He also urged the finance division to ensure that all features of the Roshan Digital Account (RDA) be extended to ESFCAs for IT companies and freelancers, enabling them to benefit from streamlined banking services and improved access to capital.
Business Recorder
24-05-2025
- Business
- Business Recorder
Freelance services: annual foreign exchange inflows may reach $500m in Pakistan
KARACHI: Annual foreign exchange inflows from freelance services are rapidly growing and expected to reach $500 million in the current fiscal year (FY25), marking a significant contribution to the national exchequer. As the global nature of work undergoes rapid transformation, Pakistan is witnessing a powerful surge in the freelancing economy. With over 70 percent of its population under 30, the country is fast becoming a hub for digital talent. Ibrahim Amin, Chairman of the Pakistan Freelancers Association (PAFLA) has emphasised the critical role freelancers now play in Pakistan's economic stabilisation, especially in the face of recurring trade and currency imbalances. Minister meets freelancers and content creators 'These aren't just individual success stories. This is sustainable, scalable foreign income entering Pakistan without factories, raw materials, or traditional exports. It's smart economics,' he added. He said that PAFLA fully supporting the freelancers to contribute in the economic growth and is also in dialogue with federal and provincial governments to shape national policy frameworks. These include proposals for tax incentives, simplified account registration, lower transaction fees on remittances, and legal protections for freelancers, he added. Powered by the digital revolution, increased internet access, and global freelancing platforms like Upwork, Fiverr, and tens of thousands of Pakistanis now offer services worldwide, from the US and UK to the Middle East and Europe. According to the State Bank of Pakistan, freelance exports officially brought in over $400 million in the last fiscal year, poised to grow as more youth join the remote workforce. 'With the current pace of growth, we are expecting that freelance exports will cross $500 million during this fiscal year', Amin said and added 'These inflows support thousands of households while strengthening Pakistan's global digital reputation across IT, design, digital marketing, and content development sectors.' Despite this momentum, Amin pointed out several structural challenges, chief among them being the lack of access to international payment gateways like PayPal, unclear taxation policies, and the absence of freelancer-centric banking products. Copyright Business Recorder, 2025
Business Recorder
24-05-2025
- Business
- Business Recorder
Freelance services: Annual foreign exchange inflows may reach $500m
KARACHI: Annual foreign exchange inflows from freelance services are rapidly growing and expected to reach $500 million in the current fiscal year (FY25), marking a significant contribution to the national exchequer. As the global nature of work undergoes rapid transformation, Pakistan is witnessing a powerful surge in the freelancing economy. With over 70 percent of its population under 30, the country is fast becoming a hub for digital talent. Ibrahim Amin, Chairman of the Pakistan Freelancers Association (PAFLA) has emphasised the critical role freelancers now play in Pakistan's economic stabilisation, especially in the face of recurring trade and currency imbalances. Minister meets freelancers and content creators 'These aren't just individual success stories. This is sustainable, scalable foreign income entering Pakistan without factories, raw materials, or traditional exports. It's smart economics,' he added. He said that PAFLA fully supporting the freelancers to contribute in the economic growth and is also in dialogue with federal and provincial governments to shape national policy frameworks. These include proposals for tax incentives, simplified account registration, lower transaction fees on remittances, and legal protections for freelancers, he added. Powered by the digital revolution, increased internet access, and global freelancing platforms like Upwork, Fiverr, and tens of thousands of Pakistanis now offer services worldwide, from the US and UK to the Middle East and Europe. According to the State Bank of Pakistan, freelance exports officially brought in over $400 million in the last fiscal year, poised to grow as more youth join the remote workforce. 'With the current pace of growth, we are expecting that freelance exports will cross $500 million during this fiscal year', Amin said and added 'These inflows support thousands of households while strengthening Pakistan's global digital reputation across IT, design, digital marketing, and content development sectors.' Despite this momentum, Amin pointed out several structural challenges, chief among them being the lack of access to international payment gateways like PayPal, unclear taxation policies, and the absence of freelancer-centric banking products. Copyright Business Recorder, 2025
