The government is considering increasing the tax rate on IT companies from 0.25 percent to 1 percent as part of the Budget 2026-27, sources familiar with the discussions told ProPakistani.

The proposal would effectively quadruple the tax rate for IT firms at a time when Pakistan’s technology sector is delivering strong export growth and higher foreign exchange earnings.

According to the Pakistan Economic Survey 2025-26, ICT export remittances rose nearly 20 percent year-on-year to $3.388 billion during July-March FY2025-26, compared to $2.829 billion in the same period of the previous fiscal year.

Pakistan’s freelance economy also posted significant growth. Freelancer remittances increased by more than 51 percent to $856.3 million, reflecting the expanding role of digital services in the country’s exports.

The proposed tax increase comes shortly after the Pakistan Freelancers Association (PAFLA) called on the government to preserve incentives for the digital economy in the upcoming budget.

In its recommendations to the Federal Board of Revenue (FBR) and the Ministry of Finance, PAFLA urged authorities to retain the existing 0.25 percent tax rate on foreign exchange earnings for at least the next ten years. The association argued that policy continuity is essential to sustain export growth, attract international business, and strengthen Pakistan’s position in the global digital marketplace.

PAFLA also proposed the establishment of freelancing hubs across multiple cities, subsidies for internationally recognized certifications, and additional capacity-building programs to support the country’s growing digital workforce.

No final decision has been announced, and discussions on the proposed tax measures are continuing as part of the budget-making process.