Islamabad– 18 July 2025 – The Pakistan Software Houses Association (P@SHA) calls upon the Government of Pakistan to lock in a long-term, predictable tax and compliance framework for the country’s technology and IT-enabled services (ITeS) sector. P@SHA’s Continuity & Consistency reform package, delivered to Ministry of Finance ahead of the Finance Bill, lays out a small number of high-impact changes that would slash compliance costs, bring tens of thousands of remote digital workers into the formal tax net, and catalyze both domestic and foreign investment into Pakistani tech firms.
“Every serious investor, local or international, asks the same two questions: What will my tax exposure be, and will the rules change after I invest?” said a P@SHA’s Chairman. “Right now, innovators spend too much time navigating overlapping regimes and too little time building export-earning products. If we hard-code continuity and make compliance near effortless, capital will move to Pakistan.”
Below are the priority actions P@SHA is urging the government to adopt without delay. Each item is designed to be implementable and fiscally responsible, while signaling stability to markets:
- Continuation of the 10-Year Final Tax Regime (FTR) on IT/ITeS export income
- Remove the discrepancies in tax rates where Pakistani IT companies get penalized for running payrolls from Pakistan.
- Create A Roshan-Digital-style channel for the IT Sector for quick FCY receipt, transparent conversion, optional retention, and straight-through data to FBR
- Rationalize Super Tax (Sec 4C) since the sector is under FTR.
- Exempt the Capital gains tax to secure investor’s confidence.
- Harmonize provincial sales tax on services (via National Tax Council) with one return/creditable mechanism across provinces.
- Remove duplicative labour-linked levies (EOBI—Sec 46, SESSI, PWWF, overlapping provincial labour rules) OR consolidate via a single digital window tailored to knowledge workers.
The requested changes are not subsidies; they are predictability, digitalization, and administrative simplification. Most steps can be budget-neutral or revenue-positive once increased documentation, broadened compliance, and higher recorded export flows are taken into account.
P@SHA proposed joint working sessions with the Federal Board of Revenue, Ministry of IT & Telecom, State Bank of Pakistan, National Tax Council, and provincial revenue authorities to translate the package into draft language, digital filing flows, and phased rollout milestones. The association recommends beginning technical work immediately so policy signals can be embedded in the Finance Bill and operational rules published within a defined implementation window.
Pakistan stands at an inflection point: with its young talent base, global client footprint, and expanding startup ecosystem, the country can compete for high-value digital work, if investors trust the rules will hold. P@SHA urges policymakers to seize this moment to send that signal.
