Pakistan’s IT sector seeks tax clarity, policy stability in upcoming budget

The Pakistan Software Houses Association (P@SHA) has urged the government to ensure policy consistency and clear tax regulations for the information technology sector in the upcoming Federal Budget 2025–26.

The IT and IT-enabled services (ITeS) sector, a key driver of Pakistan’s digital economy, contributed $3.2 billion in exports in the 2023–24 fiscal year and is projected to reach nearly $4 billion by the end of the current fiscal year, P@SHA said in a statement. The group estimates the industry could generate $15 billion in annual exports by 2030.

However, frequent policy changes, unpredictable taxation and operational hurdles are stifling growth and deterring investment, the association warned.

“Policy stability is essential for sustaining the momentum we’ve recently achieved,” P@SHA said, citing over $700 million in investment commitments from the recent Digital Foreign Direct Investment (DFDI) event, including $600 million facilitated by the association.

The group acknowledged Pakistan’s obligations under its International Monetary Fund program but emphasized that clearer tax laws — particularly on export incentives and withholding taxes — would encourage long-term investment.

“We are not seeking exemptions that conflict with international commitments,” P@SHA said. “But with practical, fair reforms, Pakistan’s IT sector can significantly boost national economic growth.”

The industry’s export potential remains closely tied to domestic market stability, the association noted, calling for budget measures that support sustained expansion.