ISLAMABAD: Pakistan’s IT exports reached a historic high of $3.8bn in FY25, marking an 18pc increase over the previous year. This performance highlights the sector’s increasing importance in the national economy, driven by rising global demand for digital services.

A significant contributor to this growth was the freelance and remote work segment, which recorded a remarkable 90pc surge to $779 million. This reflects Pakistan’s expanding pool of digital talent and rising global competitiveness in IT-enabled services.

However, despite the impressive figures, stakeholders have voiced concerns over the lack of consistent policy support from the government. They argue that without predictable regulations and streamlined compliance, the momentum could slow in the coming years.

The Ministry of IT and Telecom attributed the growth to progress across five priority areas: the global positioning of Pakistan’s IT sector, investment in talent and infrastructure, policy protection and support, reliable high-speed internet, and national digital initiatives, including the promotion of a cashless economy.

IT and Telecom Minister Shaza Fatima said the government aims to achieve $15bn in IT exports by 2030, adding that ongoing reforms will help drive sustained growth. However, the Pakistan Software Houses Association (P@SHA) has called on the government to establish a long-term, predictable tax and compliance framework for the technology and IT-enabled services (ITeS) sector.

Stakeholders call for long-term tax regime to sustain growth momentum

P@SHA Chairman Sajjad Syed noted that tech entrepreneurs spend excessive time navigating overlapping regulations instead of focusing on developing export-oriented products. “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?” he said. “If we hard-code continuity and make compliance near effortless, capital will move to Pakistan.”

The association proposed a set of measures aimed at promoting stability in the sector. These include continuation of the 10-year Final Tax Regime (FTR) on IT/ITeS export income; addressing tax discrepancies that penalise companies running payrolls from within Pakistan; and creating a Roshan Digital-style channel for the IT sector to enable fast foreign currency receipt, transparent conversion, optional retention, and integrated reporting to the FBR.

Other recommendations include rationalising the super tax (Section 4C) for the sector under FTR; exempting capital gains tax to bolster investor confidence; harmonising provincial sales tax through the National Tax Council under a single, creditable return system; and consolidating duplicative labour-linked levies such as EOBI (Section 46), SESSI, and PWWF via a single digital window designed for knowledge workers.

“These requested changes are not subsidies,” the P@SHA chief emphasised, “they are about predictability, digitalisation, and administrative simplifi­cation.” He added that most reforms could be budget-neutral or even revenue-positive if increased documentation, broader compliance, and higher reported export flows are taken into account.

Published in Dawn, July 19th, 2025