Unresolved Tax Issues Will Further Damage IT Exports; Says IT Ministry

Data from the State Bank of Pakistan shows that ITeS revenue is at a 10% month by month decline and at 4% year on year decline.

The Ministry of Information Technology and Telecommunication (MoITT) have warned the government about the dangers to Pakistan IT exports amidst the lack of consistency in tax and banking related policies.

According to the IT Ministry, the export remittances coming in from the telecom sector will further decline if the government does not take the necessary steps to implant agreed incentives, bring out consistent policies and resolve all tax related issues.

The alarm bell rang after the IT ministry noticed a decline in the export of IT and IT-enabled Services (ITeS). With IT being an important industry for the country, the numbers were alarming and should definitely be looked into.

According to details, ITeS exports declined by 0.3 percent during the first quarter of the current fiscal year 2022-23. The numbers stood at $633 million compared to $635 million of the first two months of the last fiscal year.

Data from the State Bank of Pakistan shows that ITeS revenue is at a 10% month by month decline and at 4% year on year decline.

IT is a sector that doesn’t entirely depend upon the government and the land, rather it operates remotely and has been a gold mine for Pakistan despite the current economic conditions. Taxes and the lack of policies however have also gotten the best of the IT industry.

Upon receiving the concerns, Finance Minister Ishaq Dar organized a task force meeting on Information Technology (IT) and Telecom. The Prime Minister Shahbaz Sharif also held a meeting with SBP and Federal Board of Revenue (FBR) representatives and MoIT.

According to sources, both the meetings have had positive outcomes related to tax and banking issues. FBR has also decided to come forward and help the IT industry and Freelancers. The state bank has also allowed IT companies and early resolution of 35% USD amount retention in foreign currency (FCY) accounts.