The Pakistan IT Industry Association has urged the government to ensure long-term policy stability for the country’s formal IT sector in its budget proposals for 2026-27, while also seeking clearer tax treatment for the wider digital workforce.
In its recommendations for the upcoming federal budget, the association proposed that the existing 0.25 percent final tax regime for IT exporters and genuine freelancers should be extended for 10 years. It said such continuity is essential to give confidence to the industry, attract global clients, boost foreign exchange inflows, and support registered IT companies driving the country’s digital growth.
The association said it supports maintaining a favorable environment for genuine freelancers, but stressed the need to clearly distinguish them from full-time remote employees working for foreign companies.
Under its proposal, project-based freelancers would continue to benefit from the simplified 0.25 percent final tax regime, while remote professionals earning fixed salaries from overseas employers would be taxed under standard graduated salary slabs.
Industry representatives said this distinction is necessary to create a level playing field for domestic IT companies, which face rising competition for talent from unregistered remote work arrangements despite investing in infrastructure, regulatory compliance, employee benefits, and skills development.
The association’s leadership said formalizing the tax structure for full-time remote workers would help protect the local corporate sector, improve economic documentation, and encourage individual professionals to grow into structured and globally competitive IT businesses.
Alongside tax reforms, the association also called for broader structural changes to strengthen the sector, including simplified banking procedures, smoother inward remittance systems, and easier tax filing processes.
It added that while freelancers remain an important contributor to youth employment and digital exports, the long-term goal should be to help them scale into formal enterprises.
The recommendations also highlighted the need for greater national investment in advanced technologies such as artificial intelligence, cloud computing, and cybersecurity to help Pakistan emerge as a high-value global technology outsourcing and innovation hub.
