Pakistan Software Houses Association (P@SHA) has issued a strong appeal to the federal government, requesting it not to introduce new taxes in the upcoming fiscal budget scheduled for June 10, 2025. Emphasizing the importance of long-term policy stability, P@SHA is advocating for the implementation of a fixed tax regime for the IT sector extending from 2025 to 2035. The association believes this would provide much-needed predictability and foster investor confidence in Pakistan’s technology landscape.
In a statement to the media, P@SHA Chairman Sajjad Mustafa Syed revealed that out of the total $700 million investment in Pakistan’s information technology sector, approximately $600 million stems from companies that are members of the association. He stressed that such a high stake in the country’s digital economy demonstrates the commitment of these firms and justifies the need for a supportive regulatory and fiscal environment. Syed noted that the future growth of Pakistan’s IT industry is closely tied to consistent and investment-friendly policies that allow companies to plan, expand, and hire with confidence.
Among the key demands is the continuation of the 0.25 percent withholding tax rate for companies registered with the Pakistan Software Export Board (PSEB). Syed urged the government to ensure that this preferential rate remains in place beyond 2026 under the proposed fixed tax system. He warned that any reversal or uncertainty in tax rates could lead to stagnation in IT exports and a decline in foreign interest in Pakistan’s tech sector.
Another pressing concern raised by P@SHA is the wide disparity in income tax treatment within the IT sector. Syed highlighted that while remote freelancers operating in the tech space are taxed at a flat rate of 1 percent, salaried professionals employed by tech companies can face income tax rates as high as 35 percent. This imbalance, he argued, not only creates inequality but also discourages formal employment within the sector. He called for harmonised tax treatment that ensures equitable taxation for all professionals working in IT, regardless of their employment status.
Syed also pointed to the challenges faced by tech firms in transferring foreign currency revenues into Pakistan. Inconsistent policies and regulatory bottlenecks, he stated, can undermine the confidence of foreign investors and hinder the inflow of foreign direct investment. He noted that ensuring ease in cross-border financial transactions is essential to sustaining and growing the country’s digital exports.
Citing the employment of nearly 600,000 individuals within the IT sector, Syed warned that without decisive and supportive reforms in the upcoming budget, the livelihoods of hundreds of thousands could be at risk. P@SHA’s stance comes at a time when the global digital economy is expanding rapidly and Pakistan’s tech industry stands at a critical juncture in terms of attracting both capital and talent.
