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ISLAMABAD: The Ministry of Information Technology and Telecommunication (MoITT) on Monday conveyed serious concerns to the Federal Board of Revenue (FBR) over abolishing the tax exemption regime for information technology/IT-enabled Services (ITeS) and replacing with tax credit regime, saying it can result in flight of capital and brain drain in the country.

On the direction of Federal Minister for IT and Telecom and recommendations of Prime Minister’s Taskforce on IT and Telecom, Secretary IT Shoaib Ahmad Siddiqui along with Member (IT) MoITT, Managing Director Pakistan Software Export Board, Chairman PASHA and Chair IT Sub-taskforce called upon Chairman Federal Board of Revenue (FBR) Asim Ahmad and his team in the FBR Headquarters, on Monday.

The MoITT leadership presented a detailed Industry Impact Analysis in result of recent announcements by the FBR to abolish the tax exemption regime and replacing it with recently announced Tax Credit Regime.

The secretary IT highlighted this government’s remarkable achievement in the form of IT/ITES export figures as Pakistan expects to reach landmark of USD 2 billion export remittances this year.

He emphasised that the IT sector is on high priority agenda of the prime minister and the MoITT is leading this agenda to implement it with all available resources to ensure facilitation to the IT/ITES and freelance sectors in the country.

Barkan Saeed, chairman PASHA and Syed Ahmed, chair IT sub-taskforce raised serious concerns on the FBR’s unanimous decision of taking IT/ITES sector into tax credit regime, without taking the Ministry of IT and IT industry on board.

It was shared that all the hard work will be reversed as policy inconsistency never sends a good signal to the domestic and international investors. Forum was apprised that immediate reaction of the IT/ITES and freelance sector, to this policy change, can be in the form of flight of capital and brain drain in the country.

Furthermore, the MoITT team also presented case studies of MNCs, Pakistani IT companies and freelancers to sensitise FBR policy team about recent tax notices and wrong interpretations by Tax Commissioners.

It was emphasised that the IT/ITES and freelance sectors are only surplus services sector with a highly positive impact on job market and economic growth in the country. Tax consultant also highlighted complexities around extra documentation IT/ITES sector and freelancers have to face due to tax credit regime, which can result into increased cost of doing business for new entrants specially. The chairman FBR assured that concerns of IT/ITES sector will be addressed.

The FBR and the MoITT agreed to conduct joint workshops for the IT/ITES and freelance sector to facilitate the industry in tax matters.

Copyright Business Recorder, 2021

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