KARACHI: Pakistan’s Information Technology (IT) sector has called on the government to revise tax policies to foster growth in exports and enhance the sector's competitiveness globally. Senior officials from the Pakistan Software Houses Association (P@SHA) have highlighted the need for major tax reforms to unlock the full potential of the IT industry.
Muhammad Umair Nizam, Senior Vice Chairman of P@SHA, proposed a reduction in income tax on IT employees' salaries from the current 35% to a flat 5%, urging that this change would help match the competitiveness of remote IT workers who face minimal tax burdens. He also advocated for a 10-year tax holiday to attract new investments and called for streamlined foreign exchange regulations and support from commercial banks.
Nizam further pointed out that the 10% tax on transactions involving debit cards linked to foreign exchange accounts is detrimental to the profitability of IT companies. He stressed the importance of removing this tax to improve the sector’s financial viability.
The IT sector is rapidly becoming Pakistan’s fastest-growing export industry, with projections to reach a record $4 billion in IT exports by the end of fiscal year 2025. Despite this growth, Nizam expressed concern over outdated regulatory frameworks that hinder the industry’s rapid evolution and global competitiveness.
Mehwish Salman, CEO of Datavault Pakistan, added that the government must invest in emerging technologies like AI, cybersecurity, and data engineering to ensure the sector remains on track. She also recommended initiatives for upskilling professionals and encouraging female participation in the workforce through scholarships and targeted training programs.
Former P@SHA Chairman Muhammad Zohaib Khan emphasized that IT is the only industry in Pakistan with a significant trade surplus and the potential for exponential growth, offering solutions to the country's trade deficit and employment challenges.
