Is Pakistan’s “freelancer revolution” a lie built on tax evasion?

To hear the federal government speak of it, freelancers are powering the country. There is a youth in every basement, every coworking space, every cafe, under every streetlight and in every nook and cranny of the country sitting behind a laptop tip tap tapping away at the keys for some client thousands of miles away that will pay this youth in dollars. 

That, at least, is the picture painted by the government’s official numbers on freelancers. Pakistan’s total IT related exports stand at $3.8 billion for 2025. While this number in and of itself is disputed by the industry, according to government claims nearly $779 million of this was brought in by IT freelancers. That would mean freelancers account for more than 20% of Pakistan’s total IT exports. That, dear reader, is an astronomical figure. Not only this but freelancing is also apparently on the rise. The $779 million marks an astonishing 90.6% increase compared to $408 million in 2024. And what’s more, the revenue achieved from freelancing services in the first 8 months of the current fiscal year has already reached USD 743 million, just slightly below the figure for the whole of the previous fiscal year. The figures are remarkable.

How has this been achieved? Snippets of news approved by the information ministry and broadcast on Radio Pakistan will tell you this is the result of “improved facilitation, targeted training programs, and a supportive ecosystem have contributed to the rapid growth of the freelancing economy in the country.” Essentially the government wants you to think that freelancers were told to “keep it up and do a good job” and they responded by doubling their revenue within a year. 

One can either choose to believe that explanation or take a peak under the hood. Based on a series of interviews conducted with executives and employees of different IT companies alike, the freelancer label is being used by salaried individuals in the IT industry who are definitely not freelancers. While there is no exact figure on how many such freelancers are around, Profit has been told by multiple sources that the practice is widespread in the industry. 

How does it work? The details are in a tax break. The government allows only 1 percent of tax on IT exports, a rate which whittles down to 0.25 percent if you are registered with the Pakistan Software Export Board. This incentive has led people who are not really freelancers to pose as freelancers in order to take home a higher chunk of their salary. Essentially, it is a roundabout case of tax evasion.