Software body demands predictable tax system

Presents reform package to cut compliance costs, unlock investment

Listen to article

ISLAMABAD:

The Pakistan Software Houses Association (P@SHA) has called on the government to come up with a long-term, predictable tax and compliance framework for the technology and IT-enabled services (ITeS) sector.

P@SHA's "Continuity & Consistency" reform package, delivered to the Ministry of Finance ahead of the Finance Bill, lays out some changes that will slash compliance costs, bring tens of thousands of remote digital workers into the formal tax net and catalyse domestic and foreign investment into Pakistani tech firms.

"Every serious investor, local or international, asks the same two questions: what will my tax exposure be and will the rules change after I invest?" said the association chairman in a statement issued on Saturday. "Right now, innovators spend too much time navigating overlapping regimes and too little time building export products. If we hard-code continuity and make compliance near effortless, capital will move to Pakistan."

The association has proposed a number of priority actions to the government for early adoption. These include the continuation of the 10-year final tax regime for IT/ITeS export income, removal of discrepancies in tax rates where Pakistani IT companies get penalised for running payrolls from the country, creation of a Roshan Digital Account-style channel for the IT sector for quick foreign currency receipts, transparent conversion, optional retention, straight-through data to the Federal Board of Revenue (FBR), rationalisation of super tax, exemption from capital gains tax to secure investor confidence, harmonisation of provincial sales tax on services and removal of duplicating labour-linked levies (Employees Old-age Benefits Institution, Sindh Employees Social Security Institution, Punjab Workers Welfare Fund and overlapping provincial labour rules) or consolidate them via a single digital window tailored for knowledge workers.

P@SHA asserted that the requested changes were not subsidies; rather they would promote digitalisation and lead to administrative simplification.