PAKISTAN: Incentives Package for IT Sector, Freelancers Approved

Pakistan has announced a number of incentives for businesses, investors and freelancers in information technology/information technology enabled services (IT/ITES), according to the country’s Ministry of Information Technology and Telecommunication’s 22 February 2022 statement. The incentives includes tax exemption for IT companies and freelancers for five years; a 100% capital gains tax exemption for investments in IT startups; and the relaxation of foreign exchange restrictions. The government will also introduce Specialised Foreign Currency (FCY) accounts. IT/ITES firms and freelancers will be allowed to retain 100% of remittances in FCY accounts without converting them into local currency. 

Restrictions have also been lifted for outward remittances from FCY accounts for IT firms and freelancers registered with the Pakistan Software Export Board (PSEB). A Pakistan Technology Startup Fund will also be established, offering seed funding worth PKR1 billion (US$5.6 million) to about 50 startups yearly. It is also proposed to declare certain locations in Islamabad as special technology zones, with the same concept to be subsequently extended to Lahore, Karachi, Peshawar and Quetta.