End of the IT boom? Experts warn that withdrawal of Tax exemptions will hamper Pakistan’s IT exports

The government’s decision to withdraw tax exemptions from the IT sector, initiate crackdowns on freelancers and IT companies, and issue tax notices to make them pay taxes has come when Pakistan is chasing a future $10 billion IT exports target. It has, therefore, drawn the ire of major IT stakeholders, including P@SHA. Now, Dr. Umar Saif, the former chairman of the Punjab Information Technology Board (PITB), and a senior IT professional has warned that the government’s move would “hamper” the growth in IT exports. He also expressed disappointment that the IT sector is not getting the kind of encouragement it should from the government to harness its true potential.

Dr Umar expressed these views in a recent episode of the show, “Dunya Kamran Khan Ke Sath,” hosted by the veteran journalist Kamran Khan. He also agreed that the IT industry in Pakistan is fast reaching a tipping point, so it’s not the right time to remove the exemptions.

While exhibiting concern over the elimination of tax exemptions on the IT sector, Dr Umar further said that since the tax on the IT industry was nil for a long time, it resulted in tremendous growth over the years because most IT companies didn’t have to deal with income tax officials and filing processes. However, now that a tax credits system has replaced the previous system, the IT companies would have to apply to get exemptions, which is a complicated and lengthy procedure requiring documentation.

During the show, the anchor, Kamran Khan, while setting the ground to argue against the withdrawal of tax exemptions, said that the registration of new IT companies is at its highest levels, millions of youngsters are leading the IT economy, and the growth in IT exports can drastically transform Pakistan’s future. When IT exports are expected to reach 2.5 billion by the end of the year and Karachi, Lahore, and Islamabad are becoming hubs of software technology, the government has ended exemptions on tax rather than providing an IT package similar to the Construction package.

“Imran Khan must grab this opportunity and introduce an IT package along the lines of the construction package”, the anchor said. “Millions of youth have gotten employed in the emerging IT industry’s new companies, and millions more could get employment with the right policies.”