On Wednesday, the Ministries of Finance and Information Technology and Telecommunications will fine-tune budget proposals that include a reduction in withholding tax and incentives for freelancers.
Senior officials confirmed this while speaking with a news agency. The government insists on establishing a $5 billion export target for the Information Technology (IT) sector for the fiscal year 2022-23, but the IT Ministry wants incentives to facilitate and promote the sector in order to meet this target.
During the first ten months (July-April) of the current fiscal year 2021-22, export remittances including telecommunication, computer, and information services reached an all-time high of $2.198 billion, up 29 percent from $1.7 billion during the same period in 2020-21.
The IT Ministry will raise outstanding issues concerning the IT sector with the Federal Board of Revenue (FBR) and the State Bank of Pakistan (SBP) and will propose a way forward for its earlier resolution to ensure the export target.
According to sources, the budget proposal also includes duty and tax exemptions for the establishment of cloud infrastructure.
The Pakistan Software Export Board (PSEB) will receive 5% of the annual IT export value for export promotion, and the telecom sector will be removed from the State Bank of Pakistan’s (SBP) on April 7, 2022, the 100 percent LC margin will be regulated, and sales tax on laptops and IT equipment will be reduced to zero.
The reduction of Advance Income Tax (AIT) on telecom services to 8%, as well as the rationalization and harmonization of Federal and Provincial Services Tax rates on telecom services, are likely to be on the agenda.
To read our blog on “Pakistani freelancers earned $360 million foreign exchange in 2021,” click here.
