IT Exemptions

The tax debate in Pakistan is complex and multi-layered. In the recent meeting of the National Information Technology Board, the matter of exemptions surfaced. While the government is more keen right now to expand the tax net and curb evasions, it must be kept in mind that the approach must hold due regard for sectors that will thrive only when tax walls are set to a minimum. There can be no one-size-fits-all criteria when it comes to taxing different sectors of the economy.

The case made in the NITB meeting regarding special exemptions for individual start-ups holds real thaw. That the professionals are aware of where to put tax shields and where to empower businesses with minimum tax burdens is a sign that the Information Technology Board is doing its homework. Empowering ambitious, young university graduates to work on their innovative ideas in the fields of health technology, artificial intelligence, financial technology, and agriculture technology is nothing but a long-term gain for Pakistan. We have examples from India, Bangladesh, Vietnam, and others where similar models were adopted and innovation was encouraged with the right incentives and minimum to zero hurdles. The innovation then becomes a national asset and doors open for technology export. While driving revenues is important, some sectors need to be supported through tax exemptions, investment, and incentives. IT remains a vital sector in this regard.

The establishment of the Pakistan Digital Commission must also be very quick. We already have a very shaky digital landscape where bans and interruptions dominate. For skilled individuals, these barriers only cause frustration and they end up in foreign countries making themselves known as distinct IT brands. We have a pool of human resources when it comes to the IT sector. What we need are the right steps to turn them into valuable assets and make them the drivers of innovation in the country.

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