IT professionals decry unfair tax policies

Warn of brain drain; call for austerity measures, tax exemptions for salaried class, hardware

KARACHI:

IT professionals have voiced concerns that taxing the salaried class and computer hardware amid rampant inflation is misguided. They argue that the government should exempt these categories from taxes, urging politicians and bureaucrats to reduce their own luxuries and adopt austerity measures instead.

The recent budget has been criticised for its lack of creativity and vision, with experts warning that it focuses on short-term gains at the expense of long-term stability. This approach could harm the country and drive highly-skilled professionals abroad, exacerbating the brain drain.

“The budget is unfair to the salaried class and tough on any group that follows the rules. The message seems to be: either leave the country or endure a lot of pain. To get ahead, you might need to be unethical or corrupt. This will likely lead to a brain drain, pushing our best minds to other countries while we are left with average talent,” said Salman Lakhani, Founder and CEO of Cubix.

Lakhani highlighted a 119% increase in educated people leaving the country over the past year, with passport processing now taking up to three months. This alarming trend could worsen if current policies continue, potentially pushing businesses to move their investments and seek talent elsewhere.

“If policymakers care about the country’s future, they need to consider the long-term effects of their decisions. This budget is a step in the wrong direction if there is hope for improvement,” Lakhani added.

Pakistan Software Houses Association (P@SHA) Chairman Muhammad Zohaib Khan stressed the need for reforms to facilitate smoother foreign remittances for the IT industry and broader economy. He pointed out anomalies in current tax laws, such as increased GST on laptop and desktop imports, which paint a bleak future for Pakistan’s IT industry.

P@SHA also highlighted tax anomalies faced by IT exporters under the Final Tax Regime (FTR), which imposes additional tax rates on payments abroad, hampering their efficiency and competitiveness.

Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Atif Iqbal Sheikh expressed strong concerns about the recently-announced federal budget for 2024-25, stating that it would worsen brain drain in the IT sector due to high taxation, stifling growth and innovation.

Despite repeated assurances from the incumbent government, the FPCCI’s budgetary proposals for the IT industry have been completely ignored, further frustrating industry stakeholders, said Sheikh.