The Pakistan Freelancers Association (PAFLA) has urged the Federal Board of Revenue and the Ministry of Finance to protect Pakistan's freelancing sector in the Federal Budget 2026-27. The association is calling for tax continuity, infrastructure investment, and expanded support for digital workers as freelance foreign exchange earnings approach $1 billion this fiscal year.
What does PAFLA want from Budget 2026-27?
PAFLA is asking the government to retain the 0.25 percent reduced tax rate on foreign exchange earnings for ten years, fund capacity-building programs, establish freelancing hubs across multiple cities, and subsidize internationally recognized certifications. The association also wants no new taxes on content creators and better payment infrastructure for digital workers.
Why does the 0.25% tax rate matter for freelancers?
PAFLA Chairman Ibrahim Amin said that extending the 0.25 percent tax regime would encourage freelancers to route their earnings through local banks. He added that a stable rate would inspire students, young professionals, and women to pursue freelancing as a long-term career. "A stable, simple tax regime benefits the entire digital economy, freelancers, software houses, and the broader IT industry alike," he said.
Freelancers registered with the Pakistan Software Export Board already benefit from the 0.25 percent rate. PAFLA has expressed willingness to work with PSEB to simplify registration so more freelancers can access the incentive. The association sees streamlined onboarding as key to growing the documented freelance workforce.
Chairman Amin also cited the International Labor Organization's recognition of Pakistan as one of the world's largest providers of digital labor. He described this as a reflection of the collective strength of Pakistan's tech ecosystem rather than individual achievement.
How much are Pakistani freelancers earning in foreign exchange?
According to the State Bank of Pakistan, freelancing export receipts reached $959 million between July and April of FY2025-26, a 49 percent increase from the same period the previous year. The figure places Pakistan's freelance sector close to generating $1 billion in a single fiscal year for the first time.
Dr. Imran Batada, President and CEO of PAFLA, said this growth must be protected through sound policy. He warned that imposing new taxes on content creators producing knowledge-based content, including skills training, news and analysis, educational material, and infotainment, could slow that momentum.
What risks does PAFLA warn against in the upcoming budget?
Dr. Batada cautioned that complex tax classification systems could push digital workers toward informal payment channels, reducing documented remittances and weakening Pakistan's foreign exchange position. He argued that the consequences would extend beyond freelancers to affect the wider digital economy.
He also called on the government to invest in a globally integrated national payment gateway. Such infrastructure, he said, would benefit all digital service providers operating across Pakistan, not just freelancers.
"Pakistan's freelancers have contributed nearly $1 billion in foreign exchange this fiscal year. These are young Pakistanis from every corner of the country, competing globally and bringing dollars home. Together with the broader IT industry, they represent Pakistan's greatest economic opportunity," Dr. Batada said.
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