Leaders of Pakistan’s IT industry are urging the government to reduce taxes in order to stimulate IT exports and foster growth in the sector.
Muhammad Umair Nizam, Senior Vice Chairman of the Pakistan Software Houses Association (P@SHA), has highlighted several key issues hindering the sector’s competitiveness. He called for a significant reduction in the income tax on employee salaries, currently set at 35%, suggesting it be cut to a flat 5%. According to Nizam, this change would help IT companies stay competitive and attract skilled professionals who often prefer freelancing due to the low 1% tax rate on remote workers.
In addition to tax cuts, Nizam has made other requests, including a 10-year tax holiday for IT companies, the streamlining of foreign exchange regulations, and better support from commercial banks. He also stressed the need for funds to promote skill development and faster development of Special Technology Zones (STZs) and IT parks across Pakistan.
Another concern raised by Nizam was the 10% tax on debit card transactions involving foreign exchange accounts, which he believes significantly impacts the profits of IT companies. He urged the government to abolish this tax to prevent it from draining the sector’s earnings.
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Nizam highlighted the growing potential of Pakistan’s IT industry, with exports expected to reach a record $4 billion by the fiscal year 2025. However, he pointed out that outdated regulations are slowing down growth and urged for immediate reforms.
Mehwish Salman, CEO of Datavault Pakistan, also emphasized the need for government investment in emerging technologies such as artificial intelligence, cybersecurity, the Internet of Things, and data engineering. She called for continued skill development programs, including boot camps in various cities to meet international standards. Additionally, Salman advocated for the support of female professionals by offering subsidies for women seeking certifications and scholarships for female students, believing this would increase their participation in the IT sector.
Salman also suggested introducing AI tools and coding programs at the secondary school level to foster innovation among young students.
Muhammad Zohaib Khan, former Chairman of P@SHA, reinforced the significance of the IT sector, describing it as the only industry in Pakistan with a 75% trade surplus. He stressed that IT is the only sector capable of rapid growth, job creation, and economic stability.
The consensus among industry leaders is clear: with the right reforms and investments, Pakistan’s IT sector has the potential to become a major player in global technology exports.
