Pakistan’s information technology sector may face a significant tax increase in the upcoming federal budget. Sources indicate that the federal government is considering raising the tax rate on IT companies from 0.25 percent to 1 percent. This change would increase the overall tax burden by around 300 percent.
This possible hike comes at a time when Pakistan’s technology sector is showing strong performance in exports and freelance income. According to the Pakistan Economic Survey 2025-26, ICT export remittances grew nearly 20 percent to 3.388 billion dollars during July to March of FY2025-26. This compares with 2.829 billion dollars in the same period last year.
Meanwhile, the freelance economy continued its strong upward trend. Freelancer remittances increased by 51 percent year-on-year to 856.3 million dollars. This highlights the rising role of Pakistan’s digital workforce in earning foreign exchange.
However, concerns are growing within the tech community over the possible tax revision. The development comes only days after the Pakistan Freelancers Association (PAFLA) urged the government to maintain a supportive tax structure for freelancers and the wider digital sector in the Federal Budget 2026-27.
In its recommendations, PAFLA asked the Federal Board of Revenue (FBR) and the Ministry of Finance to keep the current 0.25 percent tax rate on foreign exchange earnings for at least ten years.
In addition, the association suggested setting up freelancing hubs in major cities. It also proposed subsidies for internationally recognized certifications. Moreover, it called for initiatives to improve workforce skills.
Experts believe a stable and competitive tax policy is important for export growth. It also helps attract investment and expand Pakistan’s presence in global digital markets. For now, the government has not made a final decision on the proposed increase. The matter is expected to be clarified during today’s budget presentation.
