According to sources in the Ministry of Information Technology and Telecommunication (MoITT), the Ministry believes it is vital to re-align government initiatives in order to attract a decent portion of global outsourcing and freelancing services to Pakistan.
For freelancers, the government has devised an incentive-based program. The package aims to expedite and simplify the opening of foreign currency bank accounts for registered freelancers, lower tax rates, and create a free centralized VPN gateway service that will be whitelisted by the Pakistan Telecommunication Authority to provide services to verified freelancers registered with the Pakistan Software Export Board (PSEB).
This would assist in the creation of thousands of new employment for freelancers across a variety of industries, in keeping with the present government objective of establishing high-end, well-paying white-collar positions for youngsters working in the digital economy.
The Ministry has stated that there are no special government incentives for freelancers, and that incentives for them are needed to establish a favorable business climate. It is recommended that the incentives given to the IT industry be extended to the freelancing industry as well.
In discussions with a working group of renowned freelancers and freelancing community advocates, tax advantages for freelancers have been suggested. After proper consideration, the Ministry would suggest that these ideas be included in important documents such as the Finance Bill and the rules of the State Bank of Pakistan (SBP) and the Securities and Exchange Commission of Pakistan, among others. Subject to receipt of income/revenue through legitimate banking channels under the specified purpose codes granted by SBP, freelancers who have been legally registered with PSEB will have an income tax vacation on export revenue till 2030.
PSEB will also offer a subsidised registration fee package for freelancers, as well as easier access to PSEB programs and initiatives, such as fee and subsidised training, certifications, subsidised office space at Software Technology Parks (STPs) across the country, and international marketing and matchmaking opportunities. According to the plan, if PSEB registered freelancers want to create a single-member corporation, they will receive a 20% registration cost savings.
It is intended to make collateral-free loans up to Rs. 1 million available to PSEB registered freelancers at reduced rates through commercial banks and financial institutions.
It is planned that PSEB registered freelancers have access to subsidised health and life insurance through current and future government and commercial initiatives. PSEB registered freelancers would be eligible for house finance programs under existing and new government and private initiatives if they have a minimum of five years of freelancing exporting remittances of more than $10,000 per year. These qualifying freelancers will be offered house loan facilities at a reduced cost.
The provinces and federal capital revenue boards are recommended to apply a lower sales tax rate of not more than 2% on local services income received by PSEB registered freelancers. This sales tax payment would also only be required at the end of the billing month plus 60 days, according to the proposal.
Visa facilitation is offered as one of the non-financial incentives for PSEB registered freelancers whose export income/revenue for the previous three years exceeded $5000 per year and was deposited through official banking channels.
For PSEB registered freelancers, creating foreign currency bank accounts is expedited and simplified, with 365 percent foreign exchange retained in these accounts. It is recommended that technology business branches of commercial banks be established in at least six Pakistani cities, with SBP and commercial banks collaborating to provide required training for the personnel of these branches.
It is proposed that facilitation desks be established at PSEB offices and PSEB-operated Software Technology parks to help freelancers resolve issues such as taxation, banking, intellectual property rights, Voice Over IP whitelisting, virtual Network Access (VPN), and other legal and commercial issues.
It is also planned that Revenue Boards for PSEB build a free centralized VPN gateway service that would be whitelisted by the Pakistan Telecommunication Authority to give services to verified freelancers registered with PSEB.
IP whitelisting for voice over IP (VOIP) traffic for PSEB registered freelancers is suggested, with the VolP bandwidth limit set at 200kbps. It is recommended that ISPs/Telco operators provide Committed Information Rate (CIR) internet bandwidth service to PSEB registered freelancers bundled under a work-from-home package with a minimum of 20 Mpbs connection at discounted prices.
