The government has imposed a 0.25 percent tax on the export proceeds of computer software or IT services through Finance Bill, 2022.
According to particulars outlined in the bill, the export proceeds of computer science software or IT services or IT Enabled services by persons registered with the Pakistan Software Export Board will be taxed at a flat rate of 0.25 percent in the fiscal year 2022-23.
However, any other IT-related exports will be taxed at a flat rate of 1 percent.
While the government is aiming to raise revenue by implementing additional taxes in various sectors, the new tax could make things difficult for freelancers and individuals and eventually impact the growth of the IT sector.
It is pertinent to mention here that IT and IT services exports surged to $1.948 billion at a growth rate of 29.26 percent during July-March financial year 2021-22, in comparison to $1.5 billion in the same period last year, according to the Economic Survey 2021-22 released on Thursday.
Does that change/affect the existing 1% tax on IT export income ?
Exactly. Also, how does income tax fit into this? Will a freelancer have to pay the slab-based self-employed tax or just this fixed tax?
It should be removed now. If they do keep it, it will effetely be 1% tax, as I am not sure they will be returning the 0.75% back.
Unfair & wrong decision, there must be a revenue threshold for that i.e people earning over a certain large amount should be charged only . Not all individuals eg. Teachers etc shouldn’t be taxed. 2ndly, all foreign earnings are already usually taxed abroad . So they must not be double-taxed . The corrupt Govt. doesn’t cut its own lavish spendings but unfairly taxing the poor public! Shame!