Muneeb ur Rehman

Pakistan’s information technology (IT) sector needs specific incentives from the government to foster its growth and increase its size in the economy. Talking to WealthPK, Omer Ahmed, Chief Executive Officer of Avanza Solutions Private Limited, a leading IT firm, said that in recent years, the IT industry in Pakistan had made significant progress, serving as a vital source of employment for numerous young individuals with digital skills and talent. He said a significant option within the purview of fiscal incentives is an income tax holiday. “Typically, emerging economies adopt income tax holiday policies to attract foreign direct investment in the IT sector.” “To encourage long-term investments in the IT and IT-enabled services, it is proposed that the income tax holiday, as per clause 133 of the Second Schedule of the Income Tax Ordinance, 2001, be extended until 2025 for IT/ITeS companies registered with the Pakistan Software Export Board (PSEB),” he suggested. Ahmed pointed out that the persistent issue of export stagnation had plagued the nation for a long time. “Transitioning from conventional export sectors to emerging ones such as IT/ITeS requires the implementation of export promotion policies in the initial phase,” he added.

“A 5% cash incentive should be granted based on the net export of IT/ITeS companies and call centres registered with PSEB, subject to mutually agreed-upon verifiable criteria of the State Bank of Pakistan, the Federal Board of Revenue, the Ministry of IT & Telecom and Pakistan Software Houses Association (PASHA),” he suggested. He said that fiscal incentives on the part of the government would reduce the burden of IT companies in arranging the much-needed financial resources keeping in view the regional competition with other IT giants. Omer Ahmed suggested the government encourage investments in the country's IT infrastructure by establishing technology-focused Special Economic Zones (SEZs). “This could be achieved by making adjustments and exemptions in the existing Special Economic Zone Act of Pakistan, 2012, thereby extending the benefits and incentives of SEZs to the IT industry.” Pakistan's IT sector has the capacity to emerge as the foremost contributor in terms of employment, revenue generation, and export expansion. To attain these economic goals, fiscal incentives are imperative, he stressed.

Credit: INP-WealthPk