The Pakistan Software Houses Association (P@SHA) has urged the government to retain the existing 0.25 percent Final Tax Regime (FTR) for IT exporters and genuine freelancers in the Federal Budget 2026-27, calling for a 10-year extension to ensure stability and sustained growth in Pakistan’s digital economy.
In its budget recommendations, P@SHA emphasized the importance of maintaining a predictable tax environment for registered IT companies while continuing to support freelancers who contribute significantly to the country’s digital exports and foreign exchange earnings.
The association stated that policy continuity is essential for attracting international clients, increasing export revenues, and strengthening Pakistan’s position as a competitive global technology destination. According to P@SHA, extending the 0.25 percent final tax regime would provide confidence to investors, exporters, and digital service providers.
A key recommendation from the industry body is the clear distinction between genuine freelancers and full-time remote employees working for foreign companies. P@SHA proposes that freelancers engaged in project-based work should continue to benefit from the simplified 0.25 percent FTR, while individuals earning fixed monthly salaries from overseas employers should be taxed under the regular salary tax structure.
Commenting on the proposal, Global Freelancers Union (GFU) Honorary President Tufail Ahmed Khan welcomed P@SHA’s stance, noting that the recommendation protects legitimate freelancers while ensuring fair taxation of remote employees receiving regular salaries from foreign entities.
P@SHA believes this distinction will help create a level playing field for local IT companies that invest in infrastructure, compliance, employee benefits, and workforce development. The association argues that many domestic firms currently face challenges in retaining skilled professionals due to competition from unregistered remote work arrangements.
P@SHA Chairman Sajjad Syed said the proposed tax framework would encourage economic documentation, strengthen the formal IT sector, and support the transition of individual professionals into structured, export-oriented technology businesses.
In addition to tax measures, P@SHA has called for broader reforms to support the growth of Pakistan’s digital economy. These include simplified banking procedures, improved inward remittance systems, and streamlined tax filing processes to reduce administrative hurdles for exporters and technology companies.
While recognizing the important role freelancers play in generating employment opportunities and export earnings, P@SHA stressed that long-term policy should focus on helping freelancers scale their operations into formal businesses capable of competing in international markets.
