In the recent news, Pakistan’s IT exports have sky-rocketed to $1.948 billion at a growth rate of 29.26 percent during July-March financial year 2021-22, in comparison to $1.5 billion in the same period last year, according to the Economic Survey 2021-22 published on Thursday. Pakistan’s IT exports comprise telecommunication, computer, and information services.
The Government Has Provided 100 Percent Tax Credit on Profits Derived by the IT Startups
During the first nine months of FY22, the government of Pakistan supplied 100 percent tax credit on export income from IT and IT-enabled services until 30th June 2025. The IT sector was also offered a 100 percent tax credit on profits and gains derived by the IT startups for the tax year in which a startup is approved by Pakistan Software Export Board (PSEB), and for the next two years.
Other Incentives Proposed to Boost Pakistan’s IT Exports
- 100 percent equity ownership permitted to foreign investors, 100 percent repatriation of assets and dividends authorized, and a tax holiday for venture capital funds till 2024
- Growth-Driven Financial Incentive on IT & ITeS export remittances: The main objective of the monetary incentive strategy, is to encourage IT & ITeS export remittances via formal banking channels and improve reporting of export remittance receipts in correct IT & ITeS purpose codes, assigned by the State Bank of Pakistan.
Moreover, the government allocated Rs. 4 billion to PSEB for the first-ever financial incentive on IT & ITeS export remittances to be spent on the basis of export remittance receipts in FY2021. The rapid expansion of information technology (IT) is of crucial importance for financial growth because it allows various parties in economic and social life to have quick and easy access to information and knowledge.
IT helps businesses to lower the cost of information and communication and enhance their productivity. It also allows access to new markets and lower the capital costs of monetary markets. Moreover, the use of IT, in particular, Internet access, can promote entrepreneurial and small and micro-business movements which in turn improve endurable monetary expansion.