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Express Tribune
20-07-2025
- Business
- Express Tribune
Software body demands predictable tax system
Listen to article The Pakistan Software Houses Association (P@SHA) has called on the government to come up with a long-term, predictable tax and compliance framework for the technology and IT-enabled services (ITeS) sector. P@SHA's "Continuity & Consistency" reform package, delivered to the Ministry of Finance ahead of the Finance Bill, lays out some changes that will slash compliance costs, bring tens of thousands of remote digital workers into the formal tax net and catalyse domestic and foreign investment into Pakistani tech firms. "Every serious investor, local or international, asks the same two questions: what will my tax exposure be and will the rules change after I invest?" said the association chairman in a statement issued on Saturday. "Right now, innovators spend too much time navigating overlapping regimes and too little time building export products. If we hard-code continuity and make compliance near effortless, capital will move to Pakistan." The association has proposed a number of priority actions to the government for early adoption. These include the continuation of the 10-year final tax regime for IT/ITeS export income, removal of discrepancies in tax rates where Pakistani IT companies get penalised for running payrolls from the country, creation of a Roshan Digital Account-style channel for the IT sector for quick foreign currency receipts, transparent conversion, optional retention, straight-through data to the Federal Board of Revenue (FBR), rationalisation of super tax, exemption from capital gains tax to secure investor confidence, harmonisation of provincial sales tax on services and removal of duplicating labour-linked levies (Employees Old-age Benefits Institution, Sindh Employees Social Security Institution, Punjab Workers Welfare Fund and overlapping provincial labour rules) or consolidate them via a single digital window tailored for knowledge workers. P@SHA asserted that the requested changes were not subsidies; rather they would promote digitalisation and lead to administrative simplification.
Business Recorder
09-07-2025
- Business
- Business Recorder
Pakistan's software services exports surge to over $1bn for first time
Pakistan's export of software services has seen consistent growth over the last few years, surpassing $1 billion in an 11-month period for the first time in history. According to data released by the State Bank of Pakistan (SBP), the country earned foreign exchange of $1.01 billion through the export of software services during the period between July and May in the current financial year. This was an increase of 27.4% when compared to the $793 million figure reported in a similar period in the previous year. Overall exports of IT and Information Technology Enabled Services (ITeS) stood at $3.47 billion during the said period, of which the highest share was that of software consultancy services (29.1%.) Pakistan Software Houses Association (P@SHA) Senior Vice Chairman Muhammad Umair Nizam told Business Recorder that software consultancy services remain the main strength of Pakistan's IT industry, driving overall IT exports to an all-time high. He said the government and the Special Investment Facilitation Council (SIFC) are aggressively exploring new markets, including the Gulf, the Association of Southeast Asian Nations (ASEAN) and the European region to enhance its exports of software consultancy and other services. He added that these initiatives will further boost Pakistan's software exports with the efforts of IT companies and organisations like the Pakistan Software Export Board in the next few years. The IT sector fetched $534 million from computer software, $298 million from call centers, and $199 million from telecommunication services, according to data released by the central bank. Dr Noman Said, an IT exporter and CEO of SI Global Solutions, said the increase in exports of IT and IT-enabled services must be linked to efforts of IT companies as well as the regulatory facilitation of the government. However, he believes IT companies need to transform challenges into opportunities with the emergence of AI tools and solutions, which are scaling down the service demand of companies and professionals across the country. He suggested that IT companies should focus on targeting mega projects in foreign markets, including software and hardware services, and the installation of IT applications in diversified sectors. Pakistan is set to touch $4 billion in exports of IT and IT-enabled services. However, it may slightly miss the target by $100 to $150 million in the closing financial year 2024-25 due to internet disruption, analysts say.
Business Recorder
12-06-2025
- Business
- Business Recorder
Budget to spell doom for Pakistan's IT industry: P@SHA
KARACHI: Outrightly rejecting the budget 2025-26, IT industry said budget has fatally ignored Pakistan's IT and IT-enabled Services (ITeS) sector, terming disappointment and grave threat to the sector. In a statement, Pakistan Software Houses Association (P@SHA) said budget is decisive blow to an industry that has carried the hopes of export-led recovery; youth employment and digital transformation. It said an industry that today employs over 600,000 young Pakistanis—one of the country's largest and most vital pools of skilled talent. Yet in a stunning act of neglect, the budget fails to address two urgent and long-standing demands from the sector: first, a defined and fair taxation framework for remote workers; and second, the continuation—and expansion—of the current tax regime for formal IT exporters. What the industry has consistently asked for is not a one-time concession or patchwork relief, but a stable, 10-year tax policy framework—one that allows companies to invest, grow and compete with global peers. That has been ignored. For over a year, the Pakistan Software Houses Association (P@SHA) has warned of a growing imbalance. High-earning remote workers employed by foreign companies; often indistinguishable from full-time employees, remain largely untaxed. Meanwhile, P@sha said, companies based in Pakistan, employing and training local talent, are taxed, audited and over-regulated. This makes local hiring more expensive; while incentivizing capital flight and informal arrangements. Talent retention is collapsing; export dollars are being parked abroad, and formal firms are bleeding value. The government's refusal to act is particularly frustrating given the simplicity of the proposed solution: P@SHA has recommended classifying any individual earning over PKR 2.5 million annually from fewer than three foreign sources as a remote worker. This affects only the top 5% of earners and avoids harming freelancers and small remitters. The State Bank already tracks the necessary data. This is a policy that could be implemented overnight—yet has been ignored for years. Worse still is the government's failure to extend the existing tax regime for exporters. This regime was the foundation for over $700 million in investment commitments secured through the Digital Foreign Direct Investment (DFDI) initiative. The country spent hundreds of millions of rupees to secure this investment. Sadly, with no continuity in tax policy and those investments are now in jeopardy. Foreign investors will not engage with a country where rules shift every year. This is not just bad policy—it is a signal to the world that Pakistan's digital economy is not ready to be taken seriously. The results will be devastating. Pakistan's IT sector—its fastest-growing, most globally competitive industry—may lose its momentum entirely. Export growth will stall; jobs will disappear and the government's dream of reaching $25 billion in IT exports will not just be delayed—it will become permanently out of reach. Copyright Business Recorder, 2025
Business Recorder
12-06-2025
- Business
- Business Recorder
Budget to spell doom for IT industry: P@SHA
KARACHI: Outrightly rejecting the budget 2025-26, IT industry said budget has fatally ignored Pakistan's IT and IT-enabled Services (ITeS) sector, terming disappointment and grave threat to the sector. In a statement, Pakistan Software Houses Association (P@SHA) said budget is decisive blow to an industry that has carried the hopes of export-led recovery; youth employment and digital transformation. It said an industry that today employs over 600,000 young Pakistanis—one of the country's largest and most vital pools of skilled talent. Yet in a stunning act of neglect, the budget fails to address two urgent and long-standing demands from the sector: first, a defined and fair taxation framework for remote workers; and second, the continuation—and expansion—of the current tax regime for formal IT exporters. What the industry has consistently asked for is not a one-time concession or patchwork relief, but a stable, 10-year tax policy framework—one that allows companies to invest, grow and compete with global peers. That has been ignored. For over a year, the Pakistan Software Houses Association (P@SHA) has warned of a growing imbalance. High-earning remote workers employed by foreign companies; often indistinguishable from full-time employees, remain largely untaxed. Meanwhile, P@sha said, companies based in Pakistan, employing and training local talent, are taxed, audited and over-regulated. This makes local hiring more expensive; while incentivizing capital flight and informal arrangements. Talent retention is collapsing; export dollars are being parked abroad, and formal firms are bleeding value. The government's refusal to act is particularly frustrating given the simplicity of the proposed solution: P@SHA has recommended classifying any individual earning over PKR 2.5 million annually from fewer than three foreign sources as a remote worker. This affects only the top 5% of earners and avoids harming freelancers and small remitters. The State Bank already tracks the necessary data. This is a policy that could be implemented overnight—yet has been ignored for years. Worse still is the government's failure to extend the existing tax regime for exporters. This regime was the foundation for over $700 million in investment commitments secured through the Digital Foreign Direct Investment (DFDI) initiative. The country spent hundreds of millions of rupees to secure this investment. Sadly, with no continuity in tax policy and those investments are now in jeopardy. Foreign investors will not engage with a country where rules shift every year. This is not just bad policy—it is a signal to the world that Pakistan's digital economy is not ready to be taken seriously. The results will be devastating. Pakistan's IT sector—its fastest-growing, most globally competitive industry—may lose its momentum entirely. Export growth will stall; jobs will disappear and the government's dream of reaching $25 billion in IT exports will not just be delayed—it will become permanently out of reach. Copyright Business Recorder, 2025
Business Recorder
11-06-2025
- Business
- Business Recorder
Budget is ‘death knell' for IT industry: P@SHA
The budget has failed to address two urgent standing demands from the IT sector: a defined and fair taxation framework for remote workers, and the continuation and expansion of the current tax regime for formal IT exporters, according to the Pakistan Software Houses Association (P@SHA). In a statement on Wednesday, the association said the industry's repeated demand for a 10-year tax policy framework—one that allows companies to invest, grow and compete with global peers, has been ignored. It described this as a 'stunning act of neglect' and a 'quiet but decisive blow to an industry that has carried the hopes of export-led recovery, youth employment and digital transformation.' It added that for an industry that employs over 600,000 young Pakistanis and is one of the country's largest and most vital pools of skilled talent, 'this budget is not just a disappointment; it is a threat.' According to the association, high-earning remote workers employed by foreign companies, who are often indistinguishable from full-time employees, remain largely untaxed. Meanwhile, companies based in Pakistan, employing and training local talent, are taxed, audited and over-regulated. 'This makes local hiring more expensive; while incentivizing capital flight and informal arrangements.' It added that 'talent retention is collapsing; export dollars are being parked abroad, and formal firms are bleeding value.' Brain drain: Pakistan lost 727,381 workers to overseas employment in 2024 P@SHA said the government's refusal to act is particularly frustrating given the simplicity of its proposed solution: classifying any individual earning over Rs 2.5 million annually from fewer than three foreign sources as a remote worker. It believes this will affect only the top 5% of earners and avoids hurting freelancers and small remitters. It also said the government needs to extend the existing tax regime for exporters. It added that the $700 million in investment commitments secured through the Digital Foreign Direct Investment (DFDI) initiative is in jeopardy due to a lack of continuity in tax policy as 'foreign investors will not engage with a country where rules shift every year.' P@SHA said the budget 'is a signal to the world that Pakistan's digital economy is not ready to be taken seriously. The results will be devastating. Pakistan's IT sector—its fastest-growing, most globally competitive industry—may lose its momentum entirely.' It warned that export growth will stall; jobs will disappear and the government's dream of reaching $25 billion in IT exports will become permanently out of reach. It said the budget 2025, in its current form, is a direct threat to the survival of the formal tech ecosystem. It penalizes compliance; discourages investment and incentivizes informality. It warned that 'this is not about incentives anymore. It is about preserving one of Pakistan's only working economic success stories. The stakes could not be higher.' Pakistan's IT sector a bright spot The warning comes amid a report from i2i, which notes that Pakistan's IT sector has emerged as a bright spot in the country's otherwise sluggish economy, with exports set to reach around $3.7 billion (FY2025) and a predominantly young, tech-savvy population fueling growth. It said that in the first ten months of fiscal year 2025, IT exports reached $3.1 billion, marking a robust 21% year-on-year (YoY) increase. Notably, April 2025 saw monthly IT exports of $317 million, up 2% YoY, though down 7% month-on-month (MoM). This figure remains above the 12-month average of $314 million, reflecting the 19th consecutive month of YoY export growth starting from October 2023. Looking ahead, experts predict Pakistan's IT sector will continue its upward trajectory, expecting 10-15% growth in FY25, reaching $3.5–3.7 billion in exports. The government's ambitious 'Uraan Pakistan' economic plan targets $10 billion in IT exports by FY29, implying a compound annual growth rate (CAGR) of 28%. However, it warned that despite this momentum, structural issues remain. Freelancers, who contribute significantly to digital exports (projected to exceed $500 million in FY25), face hurdles such as limited access to international payment gateways like PayPal, unclear taxation, and a lack of tailored banking services. Moreover, the regulatory landscape around emerging fintech, including cryptocurrencies and digital assets, is still evolving.
