IT Industry Recommends Automated Tax Regime

The IT industry has recommended an automated tax regime for the IT/ITes sector. Pakistan Software Houses Association ([email protected]) has prepared a report on the Tax Analysis of Pakistan’s IT Sector and has sent recommendations to the federal government. [email protected] recommended an automated tax regime and the establishment of one window for IT taxation in the report.

The federal government has been asked in the recommendations to appoint exclusive tax commissioners for the IT and ITes sectors.

The report suggested that the FBR should appoint commissioners for the IT and ITeS sectors. These commissioners should be in charge of resolving IT companies’ problems and assisting them with any FBR-related issues.

Initially, three major cities should be nominated for these exclusive tax commissioners: Islamabad, Karachi, and Lahore. It is also suggested that a separate wing at FBR be designated for IT companies for their convenience.

[email protected] requests to speed up the establishment of Special IT Zones

According to the recommendations, the federal government should allow IT and ITeS companies to maintain 50 percent forex with hassle-free and efficient in/outflow. According to [email protected], SMEs make up 90 percent of the IT industry, and the biggest challenge for them is doing business with ease and at a low cost. The establishment of Special Technology Zones should be accelerated.

It has suggested the government initiate a sales tax refund on electricity/gas/services used as input goods in the production of exported goods.

IT industry provides export services, therefore it can be incentivized to obtain sales tax refunds on electricity/gas used. The GST on electricity is currently a cost to businesses in the form of double taxation paid not only to the federal board of revenue but also to provincial revenue authorities

[email protected] has also advocated for the elimination of the annual income tax minimum tax.

The IT & ITeS industry, according to Chairman [email protected] Muhammad Zohaib Khan, is an interesting intersection with the potential to bring in billions of dollars in revenue and foreign direct investments; it is the only sector with a trade surplus of 77 percent in FY22. However, the current growth trend cannot continue, indefinitely unless critical policy measures such as the cost of doing business are addressed.

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