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ISLAMABAD: The Ministry of Information Technology and Telecommunication (MoITT) has prepared a package of fiscal and non-fiscal incentives for freelancers including the proposal of reduced sales tax rate, not exceeding two percent, as well as income tax holiday on exports income/ revenue/ receipts till 2030 and fast-track and simplified opening of foreign currency bank accounts to create a favourable business environment.

The ministry has shared the draft of incentives package with the Finance Ministry for inclusion in the finance bill and the State Bank of Pakistan (SBP) and the SECP regulations.

Sources revealed to Business Recorder that the MoITT considers it necessary to re-align the government strategies to attract a reasonable chunk from global spending on outsourcing and freelancing services in Pakistan. This will help create thousands of new jobs for freelancers in different sectors in line with the current government policy of creating high-end and well-paying white-collar jobs for youth employed in the digital economy.

The ministry has admitted that specific government incentives for freelancers are lacking, and there is a need to consider incentives to create a favourable business environment.

It is proposed that incentives available for IT/ ITes sector should be applicable to freelance sector as well.

Fiscal incentives for freelancers are recommended in consultation with the working group of prominent freelancers and freelancing community representatives. The MoITT will recommend these proposals for inclusion in the relevant documents such as Finance bill and SBP and the SECP regulations, etc., after due process. There would be income tax holiday on export income/ revenue/ receipts of freelancers duly registered with the PSEB till 2030, subject to receipt of income/ revenue through formal banking channels in the specific purpose codes assigned by the SBP.

There is proposal of introduction of incentivized registration fee package for freelancers by the PSEB and access to the PSEB programmes and initiatives, including fee and subsidized training, certifications, subsidized office space at Software Technology Parks (STPs) across the country and access to international marketing and matchmaking opportunities. It is proposed for the SECP to introduce a 20 percent registration fee discount for the PSEB-registered freelancers, if they opt to register a single member company.

It is proposed to make available collateral-free loans up to Rs1 million to the PSEB-registered freelancers through commercial banks and financial institutions at subsidized rates.

It is proposed that the facility of subsidized health and life insurance be made available to the PSEB-registered freelancers under existing and future government and private initiatives. It is proposed that the PSEB-registered freelancers will be included in any home loan schemes under the existing and government and private initiatives subject to providing a record of a minimum of 5 years of freelancing exports remittances of more than $10,000 per annum. Such home loan facilities shall be provided to these qualified freelancers at a subsidized loan rate.

It is also proposed for the provinces and the federal capital revenue boards to implement a reduced sales tax rate, not exceeding 2 percent against the local services revenue earned by the PSEB-registered freelancers. It is further proposed that this sales tax payment shall only be due at invoice month end plus 60 days.

Among the non-fiscal incentives, it is proposed that visa facilitation shall be provided for the PSEB-registered freelancers whose export income/revenue for the last three years exceeds $5,000 for each year and it remitted through formal banking channels.

Fast-track and simplified opening of foreign currency bank accounts for the PSEB-registered freelancers is also amongst the proposals including retention of a certain percentage of foreign exchange in these bank accounts.

It is proposed to establish technology business branches of commercial banks in at least six Pakistan cities with help of the SBP and commercial banks in providing relevant training for the staff of these branches.

It is proposed to establish facilitation desks at the PSEB offices and the PSEB-operated Software Technology parks for freelancers to quickly resolve their issues pertaining to taxation, banking, intellectual property rights, Voice Over IP white-listing, Virtual Network Access (VPN), or any other legal or commercial matters.

It is proposed that the Revenue Boards for the PSEB to establish a free centralized VPN gateway service which Pakistan Telecommunication Authority will white-list to provide services to verified freelancers registered with the PSEB. It is proposed that IP white-listing will be available for voice over IP (VOIP) traffic for the PSEB-registered freelance, where the VolP traffic must not exceed 200kbps. It is proposed to ensure the provision of Committed Information Rate (CIR) internet bandwidth service by the ISPs/ telco operators packages under work from home package with a minimum of 20 Mpbs connection at subsidised process to be made available to the PSEB-registered freelancers.

Copyright Business Recorder, 2022

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