ISLAMABAD: The information technology firms have urged the government to reduce the taxes, imposed on them in the recently unveiled budget for the financial year 2022-23.
Pakistan Software Houses Association (P@SHA) for information technology (IT) and IT-enabled services (ITeS), representing over 1,000 companies, has shown reservations over the budget 2022-2023. It said that despite ambitious remarks made by the prime minister about the $15 billion target for IT and ITeS exports, the budget decimated the industry’s ability to achieve the target.
The P@SHA officials said that the previously announced relief packages for IT industry were not implemented so far. They said that abrupt changes were made in the current budget. The IT industry appears to be the latest casualty of Pakistan’s political and economic crises. As the representative of the sector, P@SHA questioned the current budget.
The chairman of P@SHA, Badar Khushnood, told WealthPK that the regressive taxation regime already proved disastrous for the IT industry. The $3.5 billion target for IT exports during the financial year 2021-22 also could not be achieved due to the introduction of an inefficient tax regime.
“Rather than facilitating the IT industry by providing incentives to it, the previously announced tax exemption has been abruptly revoked. If nothing else, this is a recipe for disaster for a nascent yet fastest growing exports-led sector,” he said.
Badar Khushnood said that in 2021, the volume of IT exports was more than $2.1 billion. “The sector has the unique distinction of being Pakistan’s only export industry with a 75 percent trade surplus as its key raw material is skilled human talent. So, there is no need to import anything for the growth of IT sector. Supporting 600,000 professionals and freelancers besides more than 10,000 companies, the IT sector has proven to be the fastest-growing industry in Pakistan,” he added.
He said that the IT industry showed the potential to address the issue of current account deficit besides ensuring a strong, self-reliant and sustainable financial future for Pakistan. He said that the IT industry was expected to become the second largest export sector of the country, surpassing all traditional sectors. The first largest export sector is the textile industry in the country.
However, he said that the outstanding performance of the industry faced a discouraging budget. He said that imposition of taxes put into question the future of IT, ITeS, startups, freelancers and the e-commerce industry in the country. –INP
He said that
instead of ensuring the continuity of the tax exemption policy, the budget spread a wave of uncertainty in the IT industry but has also created doubts about the government’s understanding of the only sector that had the potential to solve Pakistan’s economic issues in the shortest possible time.
He said that compared to Pakistan, other countries in the region established a mature ecosystem through supportive government policies. He said that a favourable environment should be fostered for the IT industry in the country. He added that Pakistan’s IT industry had already proven its growth potential to transform Pakistan besides creating more than 100,000 jobs every year.
“We are left with a very short window of opportunity before it is too late. We hope that the policymakers will understand the challenges faced by the IT industry and continue the tax exemption policy for a better and stronger Pakistan,” Badar Khushnood told WealthPK.
