Federal government has proposed extension in exemption for export of IT services and products till June 2019. Proposal was tabled in federal budget for 2016-17.
Government said that IT sector is passing through infancy stage in the country and requires support. Keeping in mind the prevailing situation, the government proposed that the exemption in taxes may be extended till June, 2019.
It must be recalled that PSEB had lobbied lately for the extension of exemption in IT export taxes.
Federal budget, however, said that IT companies — availing the tax exemption — will have to remit 80% of their revenues to Pakistan through banking channels while they can retain 20% of the revenues outside of country for meeting their expenses.
It won’t be out of place to mention here that 8% minimum tax on services companies was also proposed to be reduced to 2%, however proposal is apparently not included in the budget.
It must be mentioned here that around 40% IT companies have relocated to better taxed markets like UAE during past couple of years.
Such IT companies shifted their billings to UAE while retaining back-offices in Pakistan and hence hurting government’s efforts in achieving its tax collection targets.
