The government has announced that new firms in the IT sector will be exempt from tax starting from the fiscal year 2017-2018.
This news would immensely boost the local technology industry, Besides providing a chance to create more jobs and develop the nation as a whole.
Speaking to journalists, the spokesman for the Ministry of Information and Technology and Telecommunication, Saghiar Watto stated that this was a major step that would see to great results in the IT sector in Pakistan.
He also said that the Pakistani government had announced a progressive budget for the fiscal year 2017-2018, targeted at the IT sector. The highlight of the budget was the exemption of new technology companies from Income Tax for three years.
Saghiar Watto said that after the introduction of 3G and 4G networks in Pakistan, a lot of tech companies had been founded. With the new tax law, the same firms will not have to worry about losing large sums of their income to taxes. They would instead focus on the provision of services and products.
Among the major costs, a company incurs the payment of licenses and taxes.
With the eradication of income tax for three years, startups would be able to build themselves up before they can start paying the taxes. For most businesses, three years is enough to stabilize operations such that, by the time they are required to pay taxes, they can do so without a strain.
The increase in the number of startups has also led to the increase in the number of incubation services in Pakistan. At the moment, there are incubation firms such as Nest I/O in Karachi, the National Incubation Center in Islamabad, Plan 9 in Lahore and many others. Startups now have little likelihood of failing given that they are receiving help from all sides.
While the incubation services provide the technical knowledge and the capital, the government provides support in various ways including the reduction of the tax burden as seen above.