IT/ITeS industry is currently a flourishing sector in comparison
to other sectors of the economy. In order to further this growth momentum and
to take the sector to the next level, Ministry of IT is diligently working on
an incentives package for the sector in collaboration with relevant government
stakeholders, that will increase the IT exports of the country to $10B by
2020 and accelerate the digitization of key economic sectors locally.
In this regard,
the Minister of State for IT & Telecom Ms. Anusha Rehman Khan along with
Secretary IT and other senior officials of the ministry, has met the Prime
Minister twice in last few weeks to discuss the incentives package. The
incentives package includes various measures and is being designed after a
thorough analysis of other important IT destinations of the region like
Philippines, China, Bangladesh and India. The package will overcome the
challenges faced by the IT/ITeS industry in comparison to the competing &
regional economies. Incentive package tackles issues like high taxation on
IT/ITeS companies, lack of quality physical infrastructure and limited domestic
opportunities.
The package as
part of the Digital Pakistan Policy include fiscal proposals such as extension
of zero rated income tax regime on IT exports to 2030 (currently set to expire
in 2019), removal of 2-8% minimum tax on services as well as removal of custom
duty and sales tax for imports on specific items. 5% cash reward is also being
proposed to encourage the inward flow of IT export remittances in proper codes.
Other fiscal measures include Special Economic Zones (SEZs) for IT/ITeS sector
to encourage the investment in IT ready physical infrastructure in the country,
an issue currently hampering the growth in the sector. In addition to tech SEZs,
a land allocation model for public-private partnerships is also being devised.
Fiscal incentives will be proposed to FBR for inclusion in the Finance bill
2018-19.