Freelancers demand retaining 0.25pc tax on foreign earnings

KARACHI: The Pakistan Freelancers Association (PAFLA) has called on the Federal Board of Revenue (FBR) and the Ministry of Finance to continue supporting Pakistan’s growing freelancing and digital workforce in the Federal Budget 2026-27.

PAFLA has recommended retaining the reduced tax rate of 0.25 percent on foreign exchange earnings for the next ten years, alongside allocating funds for capacity-building programs, establishing freelancing hubs in multiple cities, and providing subsidies for internationally recognised certifications.

PAFLA Chairman Ibrahim Amin emphasised that extending the 0.25 percent tax regime would encourage freelancers to channel their earnings through local banks and inspire students, young professionals, and women to adopt freelancing as a sustainable career path.

He noted that freelancers registered with Pakistan Software Export Board (PSEB) currently benefit from the 0.25 percent rate, and PAFLA is eager to work closely with PSEB to simplify the registration process so more freelancers can access these incentives. “A stable, simple tax regime benefits the entire digital economy, freelancers, software houses, and the broader IT industry alike,” he said.

Citing the ILO’s recognition of Pakistan as one of the world’s largest providers of digital labour, Chairman Amin added that this reflects the collective strength of Pakistan’s tech and digital ecosystem.

According to the State Bank of Pakistan, freelancing export receipts surged to USD 959 million during July-April FY2025-26, up 49 percent from the same period last year.

Dr. Imran Batada, President and CEO of PAFLA, said the government should also refrain from imposing additional taxes on content creators producing knowledge-based content, including skills training, news and analysis, educational content, and infotainment.

He cautioned that complex tax classification mechanisms could push digital workers toward informal channels, reducing documented remittances and weakening Pakistan’s foreign exchange position, an outcome that would affect the entire industry.

He also urged the government to invest in improving payment infrastructure, including a globally integrated national payment gateway, a step that would benefit all digital service providers across Pakistan.

“Pakistan’s freelancers have contributed nearly USD 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 concluded.

Copyright Business Recorder, 2026