IT tax holiday

In the wake of the American entrepreneur and philanthropist Bill Gates visit to Pakistan, Prime Minister Imran Khan announced a zero-tax rate for freelancers in the IT sector and assured the youth of “all-out facilitation” during the launch of the National E-Tijarat Portal. The PM believes that youth cannot miss out on the opportunity of a tech revolution that is currently taking place in Pakistan. He also hopes to bridge the country’s trade gap with the aim to generate $50 billion through IT exports and involve the tech billionaire in future IT ventures.

This is indeed a significant development considering that the IT sector is one of the fastest growing sectors in Pakistan, currently contributing about 1% of the GDP. PM Imran is right in saying that the country’s elite-centric systems always hindered the common man from moving forward and a zero-tax rate might just help change this paradigm. But in order to ensure that maximum number of people, especially from the middle class, reap the benefits of this, the government must simultaneously work on developing infrastructure to support local tech ecosystems. We have seen e-commerce companies raise around $300 million in 2021, which experts claim could double in the next few years. Therefore, funds should be created for lower- and lower-middle income communities that lack adequate resources and contacts to initiate start-ups and bring to realisation their innovative ideas. A revolution always accompanies with it a disproportionate rise of those who are already considerably up the social ladder and the government must be wary of this.

Pakistan must acknowledge and work around a whole list of issues including poor infrastructure, a dying middle class, unemployment, and lack of technology and internet accessibility. This is why a boom in the IT sector in Pakistan cannot be treated the same as in First World or other developed countries. A step in the right direction has been taken but the PM must ensure that such initiatives help support the economic and uplift the masses.

Published in The Express Tribune, February 27^th, 2022.

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