PRA urged to reduce sales tax on BPO services

'Software houses are currently paying 16pc tax on their services, which should be brought down to 5pc'

LAHORE: The Pakistan Software Export Board (PSEB) has asked the Punjab Revenue Authority (PRA) to extend relaxation of 11 per cent in tax for the services of business process outsourcing (BPO) to the local industry.

Sources in PRA told this scribe that the PSEB representatives and the Punjab Information Technology secretary held a meeting with the PRA team the other day and sought relaxation in tax on the supply of software to the local business community.

Board officials informed PRA that the software houses were currently paying 16pc tax on their services to the local industry and that it should be brought down to 5pc.

The board also demanded relaxation on internet and VPN services, as sales tax on these services is currently 19.5pc.

The representatives further informed the authority that as all their activities were based on internet services. the industry needed high-speed internet to export software to the international market.

During FY19, Pakistan’s software exports were approximately $5 billion, which were 8pc higher than FY2018. Local application developers, freelancers, and IT companies are the major driving force behind the success of the computer software sector in Pakistan.

PRA has collected Rs860 million from the IT-enabled services during the first half of the current fiscal year.

PRA Commissioner Shahzad Mehmood Gondal told this scribe that the authority had extended them 100pc relaxation on software export, adding that the software houses were no more required to pay any tax on the export of IT services.

“We are also giving them relaxation in the sales tax on internet services. But the industry is now demanding a relaxation in BPO which is not adjustable. We have asked them to review their proposal,” he stated. “The authority has urged PSEB to get more people from the IT sector registered with the authority. More IT service providers should be registered with PRA and file their declaration as a part of broadening of tax base.”

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Shahab Omer
The writer is a member of the staff and can be reached on [email protected]
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