10-year tax holiday a must to realise IT export potential of $15bn: P@SHA

ISLAMABAD: The country is unlikely to realise the information technology export potential of $ 15 billion within the upcoming five years, as one of the key demands of a tax holiday for a period of 10 years of the industry was not met.

Muhammad Zohaib Khan, Chairman of the Pakistan Software Houses Association (P@SHA), said that while the IT industry acknowledges the fact that the industry has been prioritised in the federal budget 2023–24; but, on the other hand, these measures may prove to be inconsistent, unreliable and suffer lack of implementation – as happened with the past many budgets and IT export promotion or incentives schemes.

The real issue is the consistency of policies; which may not be achieved with the change in the government, he added.

Khan said that, for the aforementioned reason, the industry unequivocally and vociferously demanded the government and the state institutions to provide a guarantee of 15 years that the policies will not change; only then we can make strategic investments; attract foreign direct investment (FDI) and establish joint ventures with the multinationals.

One of the key demands of the IT industry was not met, i.e. a tax holiday for a period of 10 years to realise the IT export potential of $ 15 billion within the upcoming five years and $30 billion in 10 years timeframe.

Khan added that, at a time, when the confidence of domestic or foreign businessmen in Pakistan’s economic conditions is at an all-time low because of high-level of political and economic uncertainty, super tax has been withdrawn for the export-oriented companies; but, still, companies are sent notices, they are harassed and their bank accounts are held.

He stressed that the inclusion of IT and ITeS companies SMEs through extending its limit to Rs 800 million is positive; however, on the other side, six percent super tax on a company with Rs 150 million profitability neutralises the incentive.

The P@SHA chairman appreciated the introduction of the scheme for skills development of 50,000 IT graduates in the budget fiscal year 2024. This can be a game-changer if implemented across Pakistan equitably and productively, he added.

Copyright Business Recorder, 2023