Tech industry leaders call for fixed tax regime and investor-friendly reforms in FY26 budget
The Pakistan Software Houses Association (P@SHA) has urged the federal government to avoid introducing new taxes on the IT sector in the upcoming national budget. Scheduled for June 10, the budget is seen as critical for Pakistan’s growing tech industry, which currently supports hundreds of thousands of jobs.
P@SHA Chairman Sajjad Mustafa Syed stated that out of the $700 million invested in the country’s IT industry, $600 million comes from companies affiliated with the association. He emphasized that consistent and business-friendly policies are essential for continued growth and international investor confidence.
Syed called for a fixed tax regime for the next ten years, from 2025 to 2035, to be formally included in the upcoming FY26 budget. He also stressed the importance of maintaining the 0.25% withholding tax rate for PSEB-registered companies even beyond 2026, under this long-term system.
Highlighting inequalities within the tax system, he pointed out that remote freelancers only pay a 1% tax, while full-time salaried IT workers may be taxed up to 35%. He urged the government to create fair and uniform tax policies for all employment categories within the sector.
Moreover, Syed emphasized the need to simplify the process for transferring foreign earnings, noting that unclear financial rules could scare off potential investors. He warned that if reforms are not made quickly, around 600,000 jobs in Pakistan’s IT sector could be at serious risk.
As the budget date approaches, P@SHA’s strong message adds pressure on policymakers to adopt reforms that protect jobs and help position Pakistan as a global technology hub.