To encourage IT exporters to continue the momentum of exports in the current fiscal year, the government is considering prohibiting banks from deducting 1-2 percent tax on IT remittances.
“In a recent meeting, Minister of Finance Shaukat Tarin assured representatives of the IT sector that the one to two percent bank deduction that had been imposed by banks on every receipt of exports income on the account of IT and IT-enabled services since the beginning of the financial year 2021-22 would be removed soon,” said Chairman P@SHA, Barkan Saeed.
The tax authority’s notification to the banks will clarify the government’s decision in this regard.
PM Imran Khan recently attended a high-level meeting with export-oriented sectors after Pakistan’s export earnings reached $2.3 billion on a monthly basis, the highest amount ever.
Under the direct supervision of the Prime Minister, the Ministries of Finance and Commerce will have meetings with export industry players and will assist them by addressing challenges in order to maximise the export potential of various sectors, including the IT sector.
IT exporters saw a 1% tax discount on all IT receipts, including grants and investment money received from other nations into their bank accounts. Furthermore, non-filer IT exporters are subject to a 2% tax on income received from foreign sources.
P@SHA Chairman Barkan Saeed told ProPakistani that the deduction of one percent IT tax on export earnings surprised exporters of IT and IT-enabled services, who had been expecting tax credits on the basis of exemption.
The unexpected tax deduction had harmed the sentiments of IT exporters in general, as well as foreign and local investors who had made investments in Pakistan’s numerous IT enterprises.
When contacted, senior FBR officials told Propakiatani that the Board has not yet considered such a suggestion.
Pakistan’s IT and IT-enabled services exports have surpassed $2 billion for the first time in history, with a year-on-year increase of 47 percent. The astounding increase in IT export receipts is attributed to an increase in export orders from various nations during the previous financial year, putting the sector on the path to growth for the next few years.
IT industry stakeholders feel that, as a result of their productivity and specialties in a variety of disciplines, IT companies’ penetration in exporting countries is steadily expanding. They also applauded the existing administration for emphasising the IT industry while dealing with their problems and challenges.
The IT sector’s expansion has been fueled by the demand for export-oriented products and services. This would help to attract more IT remittances and provide job opportunities for talented workers.