Income from exports of computer software or IT services or IT enabled services up to the period ending on 30th day of June, 2025:
“Provided that eighty per cent of the export proceeds is brought into Pakistan in foreign exchange remitted from outside Pakistan through normal banking channels.”
(a) “IT Services” include software development, software maintenance, system integration, web design, web development, web hosting, and network design, and
(b) “IT enabled services” include inbound or outbound call centres, medical transcription, remote monitoring, graphics design, accounting services, HR services, telemedicine centers, data entry operations, locally produced television programs and insurance claims processing.
* (Section 133 of the Second Schedule of Income Tax Ordinance 2001)
Income Tax exemption on Start-ups registered with Pakistan Software Export Board
Tax exemption for three years on Profit and gains derived by a Start–up offering technology driven products or services, registered with and duly certified by the Pakistan Software Export Board (PSEB). In addition, no minimum tax is applicable.
“Profit and gains derived by a start–up as defined in clause (62A) of section 2 for the tax year in which the start-up is certified by the Pakistan Software Export Board and the following two tax years. *
*(Section 143 of Second Schedule of Income Tax Ordinance, 2001)
Sales tax exemption on export of IT services from Islamabad and other federal territories.
Exports of IT services and IT enabled services are exempt from whole of sales tax in Islamabad Capital Territory.
“In exercise of the powers conferred by clause © of sub-section 2(A) of section 3 of the Islamabad Capital Territory (Tax on Services) Ordinance, 2001 (XLII of 2001) read with clause (a) of sub-section 13 of the Sales Tax Act, 1990, the Board with the approval of the Federal Minister-in-charge is pleased to exempt whole of sales tax on export of IT services and IT- enabled services.”
*(FBR’s SRO 590(I)/2017 dated 01.07.2017)
35% of export earnings can be retained in foreign currency for payments abroad
Exporters of software to retain amounts up to 35% of their export earnings in Special Exporters Foreign Currency accounts.
“Further, it is permissible for exporters of software to retain amounts up to 35% of their export earnings in Special Exporters Foreign Currency accounts opened with the Authorized Dealers exclusively for 10 payment of commission/discount to the overseas agents/buyers and to use the same to meet other expenses such as promotional publicity, import of Hardware/Software, foreign consultant’s fee etc.” *
*(State Bank’s Foreign Exchange Manual, Chapter 12, Clause 12 (ii))
Provision of IT enabled office space in Software Technology Parks (STPs)
To help the IT industry of the country to meet its immediate goals of increased FDI, technology transfer, increased exports, technology diffusion, increased employment, and human resource development, so far, thirteen (13) STPs have been established by PSEB to provide IT enabled office space (equipped with quality ICT infrastructure and arrangements of backup power).
“The core objectives of Software Technology Parks in Pakistan are: • To provide a stable and reliable ICT infrastructure and other allied services to IT and ITeS companies in Pakistan.
• To promote the development and export of Software and software services.
• To provide high speed Data Communication services including Value Added services to IT/ITeS companies.
• To arrange backup power supply in case of power failure.
• To Promote Entrepreneurship
• Creating work conducive environment.
• Increase IT-enabled office space by establishing new STP’s in Pakistan
• Provision of reliable and redundant data communication services” *
*(PSEB’s website https://www.pseb.org.pk/pseb-programs-3/it-parks-2, retrieved 23.09.2020)
Up to 100% foreign ownership of IT & ITeS companies
As per Pakistan’s Investment Policy 2013, all sectors and activities are open for foreign investment unless specifically prohibited or restricted for reasons of national security and public safety.
“There is no upper limit on the share of foreign equity allowed, except in specific sectors including airline, banking, agriculture and media.” *
*(Section 2.1.2 of Pakistan Investment Policy , https://invest.gov.pk/sites/default/files/inline-files/InvestmentGuide.pdf, retrieved on 23.09.2020)
Up to 100% repatriation of profits for foreign IT & ITeS investors
As per Pakistan’s Investment Policy 2013, foreign investors can repatriate profits, dividends, or any other funds in the currency of the country from which the investment was originated.
“Foreign investors in any sector shall at any time repatriate profits, dividends, or any other funds in the currency of the country from which the investment was originated. As per clause 6 of the Foreign Private Investment (Promotion & Protection) Act 1976, and subject to procedural requirements set under the Foreign Exchange Manual 2002 of the State Bank of Pakistan.” *
*(Section 2.1.4 of Pakistan Investment Policy , https://invest.gov.pk/sites/default/files/inline-files/InvestmentGuide.pdf, retrieved on 23.09.2020) (Section 6 of Foreign Private Investment (Promotion and Protection) Act, 1976)
Tax holiday for venture capital funds till 2024
Venture Capital companies/funds have Income tax holiday till June 30, 2024, under Venture Capital Companies and Funds Management Rules, 2000
“Profits and gains derived between the first day of July, 2000 and the thirtieth day of June, [2024] both days inclusive, by a venture capital company and venture capital fund registered under Venture Capital Companies and Funds Management Rules, 2000 [and a Private Equity and Venture Capital Fund].” *
*(Section 101 of Second Schedule of Income Tax Ordinance, 2001)
5% Cash Reward on Export Remittances
5% cash reward shall be awarded on the net export remittances of PSEB registered IT/ITeS companies and PSEB registered call centres.
“5% cash reward shall be awarded on the net export remittances of PSEB registered IT/ITeS companies and PSEB registered call centres subject to a verifiable criterion to be agreed among the State Bank, FBR, Ministry of IT & Telecom, and Pakistan Software Houses Association (PASHA).” *
*(Page 19, Pakistan Digital Policy, https://moitt.gov.pk/SiteImage/Misc/files/DIGITAL%20PAKISTAN%20POLICY.pdf retrieved on 23.09.2020)