The Pakistan Software Houses Association (P@SHA) has urged the Federal Board of Revenue (FBR) and the Ministry of Finance to extend the 0.25 percent Final Tax Regime (FTR) on IT export proceeds under Section 154A for another 10 years, seeking continuation of the incentive until Tax Year 2036.
P@SHA Chairman Sajjad Syed warned that the current tax regime is set to expire in June 2026, creating uncertainty for Pakistan’s rapidly growing information technology sector. He said the lack of long-term tax clarity could negatively affect investment planning, export growth, foreign exchange inflows, and commitments with international clients.
According to P@SHA, Pakistan’s IT and IT-enabled Services (ITeS) industry has shown strong and resilient growth under the predictable tax framework. IT exports reached a record $3.8 billion during FY2024-25, reflecting an 18 percent increase compared to the previous fiscal year.
However, the association noted that Pakistan still holds only a small share of the global IT services market, especially when compared with regional competitors such as India. India’s technology industry generated nearly $224 billion in exports in FY2024-25 and employs more than 5.4 million professionals.
P@SHA emphasized that IT firms require long-term policy visibility before making strategic decisions regarding expansion of delivery centers, large-scale hiring, and participation in multi-year international outsourcing contracts.
The association highlighted that regional countries have secured global market positions through stable and long-duration tax incentives. India offers Special Economic Zone (SEZ) incentives lasting between 10 and 15 years, Vietnam provides IT sector tax incentives for up to 15 years, while Bangladesh grants a 100 percent corporate income tax exemption to its IT industry.
P@SHA stated that extending Pakistan’s 0.25 percent FTR for a decade would align the country with regional competitors and encourage major infrastructure investments, including data centers that typically require seven to ten years to recover investment costs.
The association further argued that long-term tax certainty would strengthen Pakistan’s position as a destination for Global Capability Centers (GCCs), as multinational companies usually demand stable fiscal policies before establishing large operational hubs.
P@SHA stressed that achieving the federal government’s target of $15 billion in IT exports by 2030 would require annual growth rates of 25 to 30 percent, which it believes cannot be achieved without long-term policy stability.
The industry body warned that failure to extend the FTR would not necessarily increase tax revenues, but could instead reduce export activity and weaken much-needed foreign exchange inflows into the economy.
P@SHA urged the government to make a timely decision before the June 2026 deadline to provide confidence to investors and help transform Pakistan into a leading global digital economy player.
