Pakistan Software Houses Association (P@SHA) Chairman Muhammad Zohaib Khan has urged the government to announce exemptions for the IT and ITeS industry in income tax, tax on dividends, capital gains, and profits in the upcoming budget.
Khan said that the said incentives have the potential to deliver 30 percent export growth in the upcoming fiscal year (FY24).
It is pertinent to note that IT industry stakeholders met Prime Minister vis-à-vis budgetary proposals on Tuesday with the primary aim of swiftly boosting IT & ITeS exports of Pakistan.
In a statement, Khan said that the prime minister has himself highlighted the IT industry time and again as the most lucrative industry for Pakistan vis-à-vis growth in exports. That is precisely the rationale behind P@SHA’s proposal to the government that it should earmark upwards of Rs. 13 billion in the Finance Bill for the IT industry, he said.
He explained that funds allocated for the IT industry should essentially go towards human resources & skills development, infrastructure development, promoting soft-image, building Brand Pakistan, and capacity enhancement of the tech ecosystem in the country.
Khan, who also sits on PM’s Advisory Council on Digital Economy, noted that another area of concern for the IT industry is foreign exchange retention for which P@SHA proposes allowing 100 percent forex exchange retention in foreign currency accounts and 100 percent repatriation as IT industry is totally dependent and operates on USD.
The P@SHA chairman added that the IT industry appreciates the idea of special technology zones (STZs), however, in the upcoming budget, benefits meant for STZs should directly go to IT & ITeS companies to effectively & efficiently help the exporters directly. Additionally, he suggested resources to enable single window operations for STZA licensees coupled with the issuance of virtual licenses and strengthening of provincial authorities in the same domain.
Elaborating on the financing needs of the IT industry, Khan said that the government needs to introduce cash rebate schemes for the IT industry, preferably, 5 percent on export income, and prioritize export refinancing scheme for the industry through discounted interest rates by at least 10 percent as compared to the prevailing key policy rate of 21 percent of the State Bank. This will make access to finance possible for the IT exporters and rationalize the cost of doing business with reference to international competitors and enhance the country’s ease of doing business score.
The P@SHA (Pakistan Software Houses Association) deserves commendation for its proactive approach in advocating for the IT industry of Pakistan. The organization’s call to the government to announce tax exemptions for the IT sector in order to enhance exports is a positive step towards fostering growth and competitiveness.
The IT industry plays a crucial role in driving economic development, generating employment opportunities, and positioning Pakistan as a global player in the digital landscape. By urging the government to provide tax exemptions, P@SHA recognizes the immense potential of the IT sector and aims to create an enabling environment for its continued growth.
Tax exemptions can significantly benefit the IT industry by reducing operational costs, encouraging innovation, and attracting foreign investment. This can lead to increased exports, which in turn can contribute to the overall economic prosperity of the country.
Moreover, P@SHA’s advocacy efforts demonstrate a strong commitment to the welfare of IT professionals, software houses, and technology startups. By advocating for tax exemptions, P@SHA aims to create a favorable ecosystem that nurtures the growth of the IT industry and enables businesses to thrive.
The association’s proactive approach in engaging with the government showcases its dedication to representing the interests of the IT sector and ensuring its long-term sustainability. P@SHA’s efforts align with the broader goal of positioning Pakistan as a regional hub for technology and innovation.
It is crucial for the government to consider P@SHA’s recommendations and work collaboratively to implement tax exemptions for the IT industry. Such measures can unlock the industry’s full potential, attract investment, and foster innovation, ultimately leading to job creation and economic growth.
P@SHA’s advocacy serves as a catalyst for positive change, and its efforts to enhance the IT industry’s exports deserve support and recognition. By prioritizing the needs of the sector, Pakistan can further harness the power of technology to transform the economy and secure a prosperous future.