IT Export Misreporting: Lawmakers Allege Tax Evasion by Textile Exporters

ISLAMABAD: Lawmakers have raised concerns over IT export misreporting, alleging that textile exporters are falsely declaring their shipments as IT exports to take advantage of lower tax rates. During a Senate Standing Committee on Finance meeting, Senator Anusha Rahman claimed that businesses were misusing the 0.25% income tax facility for IT exports to avoid the newly imposed 29% tax on goods exports.

Senator Rahman’s remarks were based on reports from within the IT sector, which also pointed to a sudden surge in IT-related company registrations as a potential indicator of IT export misreporting. She suggested that this could be distorting official IT export figures, raising doubts about the reported 28% increase in the sector’s earnings.

Federal Board of Revenue (FBR) Chairman Rashid Langrial acknowledged the possibility of such tax evasion but stopped short of confirming any violations. He assured the committee that the matter would be investigated.

Industry insiders also claim that newly registered IT firms—some incorporated just months ago—are reporting higher revenues than long-established IT businesses, further fueling concerns about the accuracy of the reported IT export growth. This has led to fears that if the alleged misuse continues, it could prompt authorities to revoke the tax incentives meant for legitimate IT exporters.

Additionally, experts have questioned how IT exports could have grown so significantly despite internet restrictions and VPN service disruptions. The Pakistan Software Houses Association (P@SHA) previously warned that these digital barriers would harm IT exports, making the recent surge seem questionable.

P@SHA Chairman Sajjad Syed told TechJuice that while concerns over potential misreporting in IT exports will be investigated, there is currently no evidence to support the claims made by the Senator.

“We have no evidence to confirm any action regarding IT export misreporting—none at all. Obviously, it will be investigated, and the authorities concerned will look into it. However, we stand by the reported 28% growth in the sector, which we believe is the true number.”

He further highlighted Pakistan’s growing presence on the global IT stage, particularly in Saudi Arabia.

“Pakistan’s IT industry is making its mark on the global stage, with strong representation in key markets like Saudi Arabia. We have 83 companies actively engaged, and the sector is showing positive indicators of growth. This international presence highlights the potential and competitiveness of our IT industry.”