The Pakistan Software Houses Association (P@SHA) has urged the government to extend the final tax regime (FTR) on IT and IT-enabled services exports until 2035. The concessional regime, which applies a 0.25% withholding tax on export proceeds, is set to expire at the end of FY26.
In its budget proposals for FY26, P@SHA argued that a 10-year extension would offer policy predictability, boost investor confidence, and align with the goals of the Special Investment Facilitation Council (SIFC) and the Prime Minister’s export-led growth strategy.
P@SHA Chairman Sajjad Mustafa Syed stressed that consistency in tax policy is crucial to support digital transformation and regional expansion of Pakistan’s IT sector. He also called for reduced income tax on salaried IT professionals to curb brain drain, citing high domestic tax rates compared to those in competing countries.
The association further recommended exempting withholding tax on dollar-denominated payments to non-resident service providers from Exporters’ Special Foreign Currency Accounts (ESFCAs), especially in cases of re-exported services, to simplify cross-border payments and attract more foreign exchange inflows.
