Latest news with #STZs
Business Recorder
16-06-2025
- Business
- Business Recorder
Enterprises in SEZs, STZs: NA panel recommends capping tax exemptions
ISLAMABAD: The National Assembly Standing Committee on Finance and Revenue on Monday recommended a budget proposal of the government regarding capping the tax exemptions to enterprises in Special Economic Zones (SEZs) and Special Technology Zones (STZs) — a condition of the International Monetary Fund (IMF), at the earlier of tax year 2035 or the completion of the 10 year period. The committee which met with Naveed Qamar in the chair also gave nod to the budgetary proposals of tax on pension income exceeding Rs10 million for individuals under the age of 70. Federal Minister for Finance and Revenue Muhammad Aurangzeb told the committee that tax exemptions are not economically sustainable. The SEZs already enjoying them were not productive as per the desired results. Authority says Pakistan's new Special Technology Zone will boost tech exports by $350mn The Federal Board of Revenue (FBR) chairman said that a sunset clause for SEZs and STZs are included in the finance bill. He said that IMF was stressing to limit this tax exemption for SEZs and STZs to 2027; however, after hectic efforts the deadline was extended to 2035. The committee members raised serious concerns over the move, while saying that it would discourage the investors and not a single dollar investment would be brought to these zones. However, the committee gave its nod after it was told that it was an IMF benchmark and needed to be fulfilled. The committee gave its nod for another IMF-backed proposal by removing the distinction between Table-I and II, all Non-Profit Organizations (NPOs) are now subject to standard compliance requirements to qualify for 100 percent tax credit. This ensures better oversight, reduces misuse of blanket exemptions and align tax benefit with clearly defined regulatory conditions, the FBR added. Regarding the rate deduction for payment through digital means and cash on delivery, the FBR informed the committee that the measures is expected to generate around Rs59 billion. However, instead of the current proposed different rates of levy ranging 1-2 percent, the Finance Ministry informed the committee that a single levy would be proposed after consultations and the committee would be informed accordingly. The committee also gave its nod to the budgetary proposals of tax on pension income exceeding Rs10 million for individuals under the age of 70. Tax at five percent rate proposed on pension income exceeding Rs10 million for individuals less than 70- years old for high earnings pensioners to broaden the tax base. Talking about FBR transformation plan interventions (already approved by the Cabinet), the FBR chairman summarised it as war on significant economic transactions by non-filers and filers without resources, financial disclosures for high value translations, conditions access to financial transactions, use of technology to enhance compliance, data sharing for risk based enforcement and expanded audit capacity with confidentiality safeguards. Copyright Business Recorder, 2025
Express Tribune
26-04-2025
- Business
- Express Tribune
IT firms demand major tax reforms
Listen to article Pakistan's Information Technology (IT) companies have strongly demanded the government to rationalise taxes on the IT sector in order to enhance its exports manifold in the coming years. Muhammad Umair Nizam, Senior Vice Chairman of the Pakistan Software Houses Association (P@SHA), called for a major reduction in the burden of income tax on employees' salaries from the current 35% to a flat 5% in order to facilitate IT companies in maintaining their exports growth. This step, he explained, would help IT companies match the competitiveness of remote workers in the IT sector who are paying a minimal tax rate of just 1% as freelancers. "P@SHA is looking forward to the government granting a 10-year tax holiday to encourage new foreign and domestic investments, the streamlining of foreign exchange regulations, greater facilitation from commercial banks, the removal of anomalies in sales tax, the allocation of dedicated funds for skill development and the acceleration of the operational materialisation of Special Technology Zones (STZs) and IT parks across the country," he said. He stressed that the government should urgently do away with the heavy 10% tax currently imposed on the transaction of debit cards linked to foreign exchange accounts, as this eats up a huge share of the earnings of IT companies and severely impacts their profitability. Highlighting the sector's potential, he said that information technology has now become the fastest-growing export industry of Pakistan, and the country is poised to achieve a record $4 billion in its IT exports for the fiscal year 2025, covering the period from July 2024 to June 2025. Nizam also pointed out that Pakistan is rapidly expanding into new sub-sectors and verticals across various spheres of technology, but expressed concern that conventional regulatory frameworks continue to create bottlenecks due to their inability to adapt to the fast-paced evolution of the global tech industry. "P@SHA's role is to translate the needs and demands of our member companies into policies, incentives, and actions. Whether it's about export taxation, ease of doing business, payroll taxation, international visibility, or digital infrastructure - we take those concerns straight to the power corridors," he added. Mehwish Salman, an award-winning serial entrepreneur and CEO of Datavault Pakistan, stated that the government must allocate a handsome portion of the national budget toward promoting emerging technologies, such as artificial intelligence, cybersecurity, the internet of things, and data engineering, to grow the country's exports and foster greater adaptation of digitisation across various sectors. In this regard, she said the government should continue its capacity-building programmes by partnering with IT companies to arrange boot camps in various cities, aiming to upskill working professionals and bring them up to par with global standards. Salman also stressed that the government should introduce subsidies for female professionals seeking certifications and specialised training, along with scholarships for female students, in order to encourage and significantly increase their contributions. "Through effective industry-academic liaison, we need to upgrade our curriculum based on emerging technologies at both private and public sector universities to meet the increasing demand for highly skilled human resources in the country's IT sector," she said. She further suggested that the applications of AI tools and coding should be introduced to students at the secondary school level, which would promote a culture of research, development, and innovation among the younger generation. Meanwhile, former Chairman of P@SHA, Muhammad Zohaib Khan, said that IT remains the only industry in Pakistan with an industry trade surplus in the vicinity of 75%, and pointed out that it is the only sector that can grow at an exponential rate, develop a skilled workforce, create employment opportunities rapidly, help curtail the country's growing trade deficit, and keep the current and external accounts healthy.
