The government approved massive incentives for information technology and the telecom sector after a meeting with the association of software houses, the finance minister, Shaukat Tarin, and the federal minister of IT and Telecom, Amin ul Haque. The Finance Minister approved Rs.10 billion funds for providing cash rewards to IT companies against their exports and offered a 5% rebate for IT exports. He also acknowledged that IT exports need to be enhanced and he ensured that the government will provide all possible facilities to the sector.
Rs.10 billion funds approved for IT sector’s advancement
Amin ul Haq informed that rupees 10 billion funds have been approved for the IT sector to provide cash rewards to IT/ITeS companies against the trade surplus of their exports of products and services from Pakistan. The Pakistan Software Houses Association (P@SHA) appreciated the Finance minister’s decision to support the IT industry.
The delegation was led by P@SHA chairman Barkan Saeed and PSEB managing director Osman Nasir. They notified the finance minister about the issues faced by the software houses and IT exports and expressed concerns over the attitude of the Federal Board of Revenue (FBR) and blamed FBR for harassing the exporters and creating obstacles to hamper the growth of the IT sector.
Special dollar account approved for freelances
The finance minister, Shaukat Tarin, directed to resolve profit repatriation issues for multinational technology companies, that will help attract FDI towards Pakistan’s tech sector, enable high-worth job growth, and enhance export income for the country. He further said that regarding Special Foreign Currency Accounts, measures have been designed to facilitate opening foreign currency accounts under the FCA regime for the IT/ ITeS industry, startups, and freelancers. Moreover, freelancers will be allowed to open a special dollar account to receive payments for their individual IT exports.
Amin ul Haque addressed the aforementioned demand of the IT industry in the meeting. As per the directions of the Minister of Finance, the Federal Board of Revenue would revise and expand the tax definition of the IT/ITeS Industry in consultation with the IT industry to ensure coverage of all IT and ITeS sub-sectors. He further added that the Minister of Finance has agreed to initiate steps to facilitate foreign-owned companies operating in Pakistan with outbound remittances. Amin ul Haque lauded Shaukat Tarin for allowing to form a high-level, high-powered dispute resolution committee for quick resolution of any tax-related disputes of the IT/ITeS industry.
The meeting was briefed that 1% of annual remittances by the IT sector would be allocated to PSEB every year to carry out skills development, capacity enhancement of IT companies, branding, marketing, and establishment of software technology parks across Pakistan. Talking to Dawn, Mr. Nasir said the decision will eventually help increase remittances from the IT services up to $3.5bn in the ongoing fiscal year against $2.1bn in 2020-21 only because the multinational companies do not bring all the earnings back to the country.