Pakistan Software Houses Association (P@SHA) has asked the government to abolish the 0.25 percent tax on export earnings of IT companies in order to enhance the inflows of foreign exchange in Pakistan.
In the proposal for the next budget for the financial year 2023-24, IT companies urged the government to support the sector which could bring foreign exchange to the country.
The government imposed a tax on export remittances in 2021 that impacted negatively on the export earnings of IT companies as well as the much-needed foreign exchange inflows of the country.
The country lost more than $500 million of potential export income in the last financial year. The exports also fell by 3 percent in the current financial year to $2.13 billion during the first ten months.
P@SHA has appealed to the government to reduce IT sector costs and taxes for local procurement including an exemption on withholding tax for local IT services. The association also proposed the government introduce a 5 percent cash reward on IT exports mainly to encourage them to achieve the export target of $5 billion by 2025 through aggressively working on IT projects.
P@SHA also reiterated its demand for the facilitation of 100 percent forex retention permission in the bank accounts and 100 percent repatriation via corporate debit cards and Internet banking.
The association of software houses also sought the support of the government to expand the footprints of the IT industry on a sustainable basis through the development of its industry and the generation of human resources.
The government should revive the Export Refinance Facility for the IT sector at a 50 percent discount on a priority basis including setting up IT clusters in major cities, enabling STZA benefits for the entire IT industry, and introducing the STZA lite concept.
The allocation of Rs. 10 billion should be announced in the next budget for skill development initiatives targeting 50,000 young professionals and students, and allocation of scholarship programs for 10,000 undergraduate students, the proposals said. The investment in human capital will bode well for enhancing the efficiency of the IT industry and creating skilled jobs for youngsters.
The government should allocate IT-Specific export development funds including an amount for branding and marketing of Pakistan and its IT industry.