Ministry of IT to Announce an Incentives Package to Boost the Industry

The Ministry of Information Technology is working on a comprehensive incentives package for IT/ITeS Industry to boost Pakistan’s IT Exports. IT/ITeS industry is currently a flourishing sector in comparison to other sectors of the economy.

In order to enhance this growth momentum and to take the sector to the next level, Ministry of IT is diligently working on an incentives package for the sector, in collaboration with relevant government stakeholders.

The incentives are expected to increase the IT exports of the country to $10 billion by 2020 and accelerate the digitization of key economic sectors locally.

In this regard, the Minister of State for IT & Telecom Anusha Rehman, along with Secretary IT and other senior officials of the ministry met the Prime Minister twice during the last few weeks to discuss the incentives package.

The incentives package includes various measures and is being designed after a thorough analysis of other important IT destinations of the region like Philippines, China, Bangladesh and India.

The package will overcome the challenges faced by the IT/ITeS industry from competing & regional economies.

Incentive package will tackle issues like high taxation on IT/ITeS companies, lack of quality physical infrastructure and limited domestic opportunities.

The package, as part of the Digital Pakistan Policy, will include fiscal proposals such as:

  • Extension of zero rated income tax regime on IT exports to 2030 (currently set to expire in 2019).
  • Removal of 2-8% minimum tax on services.
  • Removal of custom duty and sales tax for imports on specific items.

5% cash reward is also being proposed to encourage the inward flow of IT export remittances in proper codes.

Other fiscal measures include Special Economic Zones (SEZs) for IT/ITeS sector to encourage investment in IT ready physical infrastructure in the country, an issue currently hampering the growth in the sector.

In addition to tech SEZs, a land allocation model for public-private partnerships is also being devised. Fiscal incentives will be proposed to FBR for inclusion in the Finance bill 2018-19.

  • Lets see if the govt actually provides the 5% reward to IT companies. Otherwise, empty vessels make a lot of noise. Current IT remittances are below $1 billion a year. So to reach $10 billion a year by 2020 means an annual growth rate of more than 200% over the next 3 years which is like living in a fools paradise :(

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