Federal Board of Revenue has notified the reduction in sales tax of IT services and IT enabled services for Islamabad region.
According to a tweet by Barkan Saeed, Chairman Pakistan Software Association (PASHA), the sales tax for IT services will be set at 5% for Islamabad and other federal territories.
Not to mention, the move is in-line with Digital Pakistan Policy — approved by outgoing government during its last week — that promised major incentives for IT industry.
It is hoped that other provinces will follow suit and a reduction in sales tax for IT industry will be introduced in rest of Pakistan as well.
As per Digital Pakistan Policy 2018, here are some other incentives that government will offer to IT industry:
- 100% foreign ownership allowed
- 100% repatriation of capital & dividends (subject to SBP Approval)
- IT & ITeS Export Income Tax exemption till June 2019 (Extended till 2024 just recently)
- Income tax holiday for Venture Capital companies/funds till June 2024
Furthering the enabling environment for the sector, additional Incentives were announced in the newly approved policy that includes:
- Extension of zero-rated tax regime on IT/ITeS exports till 2025
- 5% cash reward on IT export remittances
- Rreduction of sales tax to 5% on domestic revenues in Islamabad capital territories (ICT)
- Legislation for Tech SEZs and new IT Parks.