{"id":1231,"date":"2025-06-11T15:01:02","date_gmt":"2025-06-11T15:01:02","guid":{"rendered":"https:\/\/custombulletin.com\/english\/?p=1231"},"modified":"2025-06-11T15:01:02","modified_gmt":"2025-06-11T15:01:02","slug":"budget-is-death-knell-for-it-industry-psha","status":"publish","type":"post","link":"https:\/\/custombulletin.com\/english\/2025\/06\/11\/budget-is-death-knell-for-it-industry-psha\/","title":{"rendered":"Budget is \u2018death knell\u2019 for IT industry: P@SHA"},"content":{"rendered":"

Islamabad : The budget has failed to address two urgent standing demands from the IT sector: a defined and fair taxation framework for remote workers, and the continuation and expansion of the current tax regime for formal IT exporters, according to the Pakistan Software Houses Association (P@SHA).<\/strong><\/p>\n

In a statement on Wednesday, the association said the industry\u2019s repeated demand for a 10-year tax policy framework\u2014one that allows companies to invest, grow and compete with global peers, has been ignored.<\/p>\n

It described this as a \u201cstunning act of neglect\u201d and a \u201cquiet but decisive blow to an industry that has carried the hopes of export-led recovery, youth employment and digital transformation.\u201d<\/p>\n

It added that for an industry that employs over 600,000 young Pakistanis and is one of the country\u2019s largest and most vital pools of skilled talent, \u201cthis budget is not just a disappointment; it is a threat.\u201d<\/p>\n

According to the association, high-earning remote workers employed by foreign companies, who are often indistinguishable from full-time employees, remain largely untaxed.<\/p>\n

Meanwhile, companies based in Pakistan, employing and training local talent, are taxed, audited and over-regulated.<\/p>\n

\u201cThis makes local hiring more expensive; while incentivizing capital flight and informal arrangements.\u201d<\/p>\n

It added that \u201ctalent retention is collapsing; export dollars are being parked abroad, and formal firms are bleeding value.\u201d<\/p>\n

P@SHA said the government\u2019s refusal to act is particularly frustrating given the simplicity of its proposed solution: classifying any individual earning over Rs 2.5 million annually from fewer than three foreign sources as a remote worker.<\/p>\n

It believes this will affect only the top 5% of earners and avoids hurting freelancers and small remitters.<\/p>\n

It also said the government needs to extend the existing tax regime for exporters.<\/p>\n

It added that the $700 million in investment commitments secured through the Digital Foreign Direct Investment (DFDI) initiative is in jeopardy due to a lack of continuity in tax policy as \u201cforeign investors will not engage with a country where rules shift every year.\u201d<\/p>\n

P@SHA said the budget \u201cis a signal to the world that Pakistan\u2019s digital economy is not ready to be taken seriously. The results will be devastating. Pakistan\u2019s IT sector\u2014its fastest-growing, most globally competitive industry\u2014may lose its momentum entirely.\u201d<\/p>\n

It warned that export growth will stall; jobs will disappear and the government\u2019s dream of reaching $25 billion in IT exports will become permanently out of reach.<\/p>\n

It said the budget 2025, in its current form, is a direct threat to the survival of the formal tech ecosystem. It penalizes compliance; discourages investment and incentivizes informality.<\/p>\n

It warned that \u201cthis is not about incentives anymore. It is about preserving one of Pakistan\u2019s only working economic success stories. The stakes could not be higher.\u201d<\/p>\n

Pakistan\u2019s IT sector a bright spot<\/strong><\/p>\n

The warning comes amid a report from i2i, which notes that Pakistan\u2019s IT sector has emerged as a bright spot in the country\u2019s otherwise sluggish economy, with exports set to reach around $3.7 billion (FY2025) and a predominantly young, tech-savvy population fueling growth.<\/p>\n

It said that in the first ten months of fiscal year 2025, IT exports reached $3.1 billion, marking a robust 21% year-on-year (YoY) increase.<\/p>\n

Notably, April 2025 saw monthly IT exports of $317 million, up 2% YoY, though down 7% month-on-month (MoM). This figure remains above the 12-month average of $314 million, reflecting the 19th consecutive month of YoY export growth starting from October 2023.<\/p>\n

Looking ahead, experts predict Pakistan\u2019s IT sector will continue its upward trajectory, expecting 10-15% growth in FY25, reaching $3.5\u20133.7 billion in exports. The government\u2019s ambitious \u2018Uraan Pakistan\u2019 economic plan targets $10 billion in IT exports by FY29, implying a compound annual growth rate (CAGR) of 28%.<\/p>\n

However, it warned that despite this momentum, structural issues remain. Freelancers, who contribute significantly to digital exports (projected to exceed $500 million in FY25), face hurdles such as limited access to international payment gateways like PayPal, unclear taxation, and a lack of tailored banking services. Moreover, the regulatory landscape around emerging fintech, including cryptocurrencies and digital assets, is still evolving<\/p>\n","protected":false},"excerpt":{"rendered":"

Islamabad : The budget has failed to address two urgent standing demands from the IT sector: a defined and fair taxation framework for remote workers, and the continuation and expansion of the current tax regime for formal IT exporters, according to the Pakistan Software Houses Association (P@SHA). In a statement on Wednesday, the association said …<\/p>\n","protected":false},"author":1,"featured_media":1232,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[17,51],"tags":[136,139],"class_list":["post-1231","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-tie-business","category-business","tag-budget-fy-2025-26","tag-it-sector"],"yoast_head":"\nBudget is \u2018death knell\u2019 for IT industry: P@SHA - Custom Bulletin<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/custombulletin.com\/english\/2025\/06\/11\/budget-is-death-knell-for-it-industry-psha\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Budget is \u2018death knell\u2019 for IT industry: P@SHA - Custom Bulletin\" \/>\n<meta property=\"og:description\" content=\"Islamabad : The budget has failed to address two urgent standing demands from the IT sector: a defined and fair taxation framework for remote workers, and the continuation and expansion of the current tax regime for formal IT exporters, according to the Pakistan Software Houses Association (P@SHA). 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