Experts Cautions Government Not To Impose More Tax On Freelancers

The Pakistani government is considering increasing the burden on freelancers and digital content creators. Experts caution the government against imposing new taxes on freelancers and content creators, including YouTubers, vloggers, and TikTokers, in the federal budget (FY25). The Pakistan Economic Survey 2024-25 highlights that freelancers contributed a substantial $400 million foreign exchange during the first nine months of FY25. This figure is expected to grow, with the potential to exceed $1 billion if the sector is supported.

Experts, including Ibrahim Amin, Chairman of the Pakistan Freelancers Association (PAFLA), warn that broad taxation could deter struggling freelancers and budding digital creators, thereby reducing foreign exchange earnings.

Hisham Sarwar, a prominent digital skills trainer, points to Bangladesh’s success with tax holidays and cashback incentives for its IT sector and freelancers, urging Pakistan to adopt similar supportive policies.

Most freelancers already pay taxes through various transactions and incur deductions from freelancing platforms and payment gateways. Imposing additional direct taxes is seen as a double burden.

The concern is that a blanket tax approach would disproportionately affect lower-earning or emerging freelancers, rather than targeting genuinely high-earning individuals.

Ibrahim Amin suggests that if taxation is deemed necessary, the Federal Board of Revenue (FBR) should consider taxing only a select group of high-earning entertainment content creators with substantial followings and revenues. Muhammad Umair Nizam, Senior Vice Chairman of P@SHA, reiterates calls for an extension of the Final Tax Regime (FTR) for freelancers and IT exporters by up to 10 years, providing long-term stability and incentives.

In essence, the experts are urging the Pakistani government to adopt a nuanced approach, focusing on policies that foster growth, and foreign exchange generation within the digital economy.