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ISLAMABAD: Federal Minister for Information Technology and Telecommunications Syed Aminul Haque on Monday said the Federal Board of Revenue’s policies and some rules of the State Bank of Pakistan (SBP) are hindering the growth of information technology (IT) exports in the country and increasing export remittances through freelancers.

“Due to the FBR policies and some rules of the SBP, it is feared that local talent may be working here but by operating its own company from another country, that country may be getting all the foreign exchange and credit of IT exports”, said Haque while presiding over a meeting of the Policy Committee and Research and Development Fund here on Monday.

Haque further stated that the FBR policies were an impediment to the increase in the number of IT exports and freelancers and export remittances, due to which software companies and freelancers were thinking of shifting their business to other countries. This would be dangerous because our talent would be used here but the benefits and credit would go to another country, there is no reason why we can get billions of dollars’ worth of foreign exchange from the IT Sector.

“It is necessary to relax strict conditions including tax enforcement and give maximum relaxation to the IT industry and Freelancers, otherwise, it is feared that if IT companies and freelancers are not given facilities including tax incentives, the industry will shut down soon”.

Sources told Business Recorder that the IT Ministry will target $5 billion in exports of the information technology (IT) sector for the next fiscal year, which would be subject to the resolution of outstanding issues with the FBR and the SBP.

The ministry has concerns over matters related to withholding tax and incentives for freelancers.

The ministry had proposed duties and taxes exemption for the establishment of Cloud Infrastructure, five percent of annual IT export value to be given to the Pakistan Software Export Board (PSEB) for export promotion, removal of the telecom sector from the SBP’s 7 April 2022 regulation of 100 percent LC margin, reduction of sales tax to zero on laptops and IT equipment, rationalization of Advance Income Tax (AIT) on telecom services to eight percent and rationalization and harmonization of the federal and provincial services tax rates on telecom services to facilitate the IT sector.

The meeting approved in principle a budget of Rs32.13 billion for the Universal Service Fund (USF), a subsidiary of the Ministry of IT, for the financial year 2022-23 and Rs3.75 billion for the National Technology Fund (Ignite).

Harris Mahmood Chaudhry, Chief Executive Officer, USF and Asim Shehryar, Chief Executive Officer, Ignite briefed the meeting on the performance of their respective organizations and details regarding the amount allocated in the budget.

Federal Minister for IT and Telecom said that the USF has done record work for providing broadband services in the last four years.“In the 13 years from 2006 to 2019, the number of USF projects was limited to 59, after which directives were issued to speed-up number of projects and increase the performance, as a result, 65 Broadband Service and OFC projects were launched from 2019 to date. Which is a record itself” he added.

Haque said that as a result of Telecom Policies and provision of broadband services to un-served and under-served areas, the number of telecom subscribers has reached a record level of 193 million by May 30, 2022.

The number of 3G and 4G subscribers in the country has crossed 114 million while the number of subscribers using broadband services has reached 117 million.

The meeting was attended by Secretary IT Mohsin Mushtaq, Additional Secretary Finance, Member Telecom and other officials.

Copyright Business Recorder, 2022

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