Acquitted Tax for Computer software or IT services

Income from exports of computer software or IT services or IT enabled services (ITeS) is tax exempt till the period ending on 30th June, 2016

Pakistan Software Export Board (PSEB), with the support of the Ministry of Information Technology and Pakistan Software Houses Association (P@SHA) has proposed to the Federal Board of Revenue to extend the IT export income tax exemption till at-least 2020 in order to give Pakistan’s emerging IT industry time to mature. It is expected that the Government will positively consider the proposal and extend the tax exemption status till 2020 in the budget announcement for 2016-17.
However, in order to avail the IT/ITeS export income tax exemption, freelancers and IT businesses must properly report their foreign income receipts. This can be done easily. When receiving foreign remittances in your local currency bank account, whether you are an individual tax payer or a company, you need to inform your bank to use one of the following codes assigned by the State Bank of Pakistan (SBP) for IT related services. It is pertinent to mention here that export-oriented IT companies are permitted to retain amounts up to 35% of their export earnings in Special Exporters Foreign Currency accounts opened with the banks, exclusively for payment of commission/discount to the overseas agents/buyers and to use the same to meet other expenses such as promotional publicity, import of Hardware/Software, foreign consultant’s fee, etc.

 




 Reference: 

[(133) income exports of computer software or IT services or IT enabled services up to the period ending of 30th days on June , [2019]

[“Provided that eighty per cent of the export proceeds is brought into Pakistan in foreign exchange remitted from outside Pakistan through normal banking channels .]

Explanation. – For the purpose of this clause –

  • “IT Services” include software development software maintenance system integration , web design, web development, web hosting, and network design , and
  • “IT Eabled services include inbound or outbound call centers medical transcription, remote monitoring, graphics design, accounting  HR Services. Telemedicine centers, data entry operation. [locally produced television programs] and insurance claims processing .]

This News From: Domestic Department, Pakistan Software Export Board

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