Government Reportedly Considers Higher Levy on Technology Companies
ISLAMABAD: Pakistan’s rapidly growing information technology sector may face a significantly higher tax burden under the upcoming federal budget, according to sources familiar with ongoing budget deliberations.
Reports indicate that the federal government is considering increasing the tax rate on IT companies from 0.25 percent to 1 percent. If approved, the move would effectively raise the tax burden on the sector by 300 percent.
The proposal has emerged at a time when Pakistan’s technology industry is recording strong growth in exports and foreign exchange earnings. Industry stakeholders have expressed concern that higher taxation could affect the sector’s competitiveness and discourage further investment.
Government officials have not yet announced a final decision, and greater clarity is expected when the federal budget is formally presented.
Technology Exports and Freelance Earnings Continue Strong Growth
According to the Pakistan Economic Survey 2025-26, information and communication technology (ICT) export remittances increased nearly 20 percent during the first nine months of the fiscal year.
Export earnings reached $3.388 billion between July and March FY2025-26, compared with $2.829 billion during the corresponding period of the previous year. The figures reflect the growing importance of digital services as a source of foreign exchange for the country.
Meanwhile, Pakistan’s freelance economy continued to expand at an impressive pace. Freelancer remittances surged by 51 percent year-on-year, reaching $856.3 million during the same period.
Industry Groups Call for Continued Tax Support
The reported proposal comes shortly after the Pakistan Freelancers Association (PAFLA) urged policymakers to maintain supportive tax policies for freelancers and digital businesses in the 2026-27 budget.
In its recommendations, the association called on the Federal Board of Revenue and the Ministry of Finance to retain the current 0.25 percent tax rate on foreign exchange earnings for at least the next ten years.
PAFLA also proposed the establishment of dedicated freelancing hubs, subsidies for internationally recognized certifications and new initiatives aimed at improving workforce skills.
Industry representatives argue that maintaining a competitive tax structure remains essential for sustaining export growth, attracting investment and strengthening Pakistan’s position in global digital markets.
