The Ministry of Information Technology and Telecommunication in Pakistan has taken a big step towards promoting freelancing by developing the “National Freelancing Policy.” This policy aims to position Pakistan as a leading global freelance market while taking care of economic growth through increased exports and foreign exchange earnings. By introducing favorable tax rates, facilitating foreign exchange remittances, and providing various support measures, the policy seeks to create a conducive environment for freelancers in the country.
National Freelancing Policy: Empowering Freelancers with Tax Benefits
One of the key aspects of the National Freelancing Policy is the proposal to implement reduced sales tax rates, not exceeding two percent, on local services revenue earned by freelancers registered with the Pakistan Software Export Board (PSEB). This initiative aims to ease the tax burden on freelancers and encourage their participation in the formal economy. By creating a favorable tax environment, the policy seeks to attract more individuals to engage in freelancing and contribute to the country’s economic growth.
The PSEB and relevant government and private sector organizations collaborate on providing subsidized health insurance, life insurance, and employee liability insurance to registered freelancers. It will create partnerships with multinational technology companies (tech MNCs) for subsidizing the course materials and certifications, making such material available to the registered freelancers.
Supporting Foreign Exchange Remittances
The policy outlines collaborations between the PSEB and the State Bank of Pakistan (SBP) to facilitate freelancers’ international transactions. These collaborations aim to streamline inward foreign exchange remittances from freelancing activities by introducing freelancing-defined codes eligible for income tax exemptions. Additionally, efforts will be made to enable registered freelancers to open foreign exchange bank accounts, allowing for smoother financial operations. The SBP will permit the retention of 35 percent of foreign exchange income in these accounts, while the Ministry of Finance and the Federal Board of Revenue (FBR) will ensure income tax exemption for foreign exchange export remittances received under freelancing codes until 2030.
Providing Support and Opportunities
The National Freelancing Policy extends beyond financial benefits. It also addresses various other areas of support for freelancers. Visa facilitation measures will be implemented for freelancers with a proven record of IT and ITeS export remittances. Subsidized home loan schemes will be made available to registered freelancers, subject to specific export remittance criteria. Moreover, initiatives for marketing, training, certifications, and access to international markets will be launched to enhance freelancers’ skills and expand their opportunities.