The Federal Board of Revenue is drafting a Presidential Ordinance to extend grant incentives, including tax exemptions, to facilitate the IT sector, freelancers and startups as announced by the Prime Minister Imran Khan.
It is learnt that that the tax officials are in the process of drafting a Presidential Ordinance to facilitate the IT sector. The tax exemption benefit was the biggest demand of the sector. If the Ordinance is promulgated before next fiscal year, this Ordinance would only give tax benefits and no new taxation, they added.
Prime Minister Khan had announced a complete tax exemption for information technology (IT) companies and freelancers, reverting the earlier status of the IT industry as tax-exempt. The package included 100 per cent capital gains tax exemption will be given for investments in IT startups, besides easing foreign exchange restrictions for the industry.
The prime minister has directed to allow IT/ITeS companies and freelancers to retain 100 percent amount of remittances received through proper banking channels, in FCY Accounts without any compulsion to convert them into PKR.
Furthermore, there will be no restriction of outward remittances from FCY account for PSEB-registered IT companies and freelancers.
The prime minister has also directed the SBP to introduce financing streams for IT/ITES sector and freelancers keeping in view operational architecture and industry needs for these sectors.
MoITT had prepared a package of fiscal and non-fiscal incentives for freelancers including the proposal of reduced sales tax rate, not exceeding two percent, as well as income tax holiday on exports income/revenue/receipts till 2030 and fast-track and simplified opening of foreign currency bank accounts to create a favourable business environment.
The FBR had issued a clarification on February 8, 2022 that no Ordinance is coming to withdraw further sales tax exemptions before Finance Act, 2022.
The FBR had clarified that the review of the tax laws is an ongoing exercise which the FBR undertakes in routine.
The story was originally published in Business Recorder on March 19, 2022.
