P@SHA has called on the Government of Pakistan to implement a predictable, long-term tax and compliance framework for the country’s technology and IT-enabled services (ITeS) sector. In a reform proposal titled “Continuity & Consistency,” submitted to the Ministry of Finance ahead of the Finance Bill, the association laid out a focused set of policy actions aimed at lowering compliance costs, encouraging formalization among remote digital workers, and attracting substantial domestic and international investment into Pakistan’s growing tech ecosystem.
The proposal emphasizes that what investors value most is clarity—knowing their tax exposure and whether rules will remain stable post-investment. P@SHA’s Chairman noted that too many innovators are caught up navigating inconsistent regulations and fragmented tax regimes when their energy should be directed toward building export-oriented technology products. The association believes that certainty in policy and simplicity in processes will channel investment toward Pakistan at scale.
Among the key reforms P@SHA has recommended is the continuation of the 10-year Final Tax Regime (FTR) on IT and ITeS export income, a move it says would give long-term confidence to both investors and entrepreneurs. It also calls for resolving discrepancies in tax rates that disadvantage Pakistani IT companies for managing payrolls locally, which disincentivizes formal employment and discourages domestic operations.
To improve financial transparency and ease of doing business, P@SHA has proposed a Roshan-Digital-style foreign currency channel tailored to IT exporters. This mechanism would allow for fast remittance receipt, optional retention, transparent currency conversion, and direct data integration with FBR systems. Rationalizing super tax (Section 4C), exempting capital gains tax for the sector, and harmonizing provincial sales tax filings are also central to the package. P@SHA suggests that a unified, creditable return system for sales tax on services should be introduced through coordination with the National Tax Council.
The association further recommends addressing duplicative labour-related levies, such as EOBI (Section 46), SESSI, and PWWF, which often overlap with provincial labour rules. It proposes consolidating these through a single digital window customized for knowledge workers, thereby reducing administrative burden and improving documentation.
These changes are not framed as fiscal giveaways but as policy rationalizations that enable predictability, digitalization, and efficiency. P@SHA argues that many of the recommendations can be revenue-positive or budget-neutral over time by encouraging documentation, expanding the formal tax base, and capturing a greater share of export earnings through formal channels.
To ensure these reforms move swiftly from concept to implementation, P@SHA has proposed joint working sessions with FBR, Ministry of IT & Telecom, State Bank of Pakistan, National Tax Council, and provincial tax authorities. These sessions would help translate the proposed framework into draft legislation, digital filing formats, and clearly defined rollout milestones. By embedding these reforms into the Finance Bill and associated rules, Pakistan’s tech sector could gain the stability and simplicity required to compete globally and grow sustainably.
