Replacement of tax holiday for the Information Technology industry till 2025 with tax credit scheme had spoiled the opportunity in IT exports of up to US $500 million in FY-22, said Faizul Haq.
Information Technology industry is the only industry in Pakistan having a trade surplus of 77 per cent can squeeze down the country’s current account deficit from FY-23’s projected US $10 to 12 billion to US $5 billion by financial year 2026.
A renowned economist, Faizul Haq said in a media statement that replacement of tax holiday for the Information Technology industry till 2025 with tax credit scheme had spoiled the opportunity in IT exports of up to US $500 million in FY-22.
It is pertinent to note that IT exports posted a growth of a whopping 47 per cent in FY-21 and 24 per cent in FY-22, collectively registering 87 per cent growth rate in just two-year from US $1.4 billion in FY-20 to US $2.62 billion in FY22.
Faizul Haq suggested that the government should extend a special export finance scheme (EFS) to IT companies; offering a discount of 600 � 700 basis points (bps) vis-a-vis policy rate; i.
e. 8-9 per cent EFS rate for IT exporters. This would not only enable the IT companies to achieve the FY-23 export target of US $3.5 billion, but also ensure exponential growth in IT exports for the period between FY-24 to FY-30. This exponential growth would mean earning up to US $15 billion per year in IT exports by FY-30.
He mentioned that the IT gaming industry alone in Pakistan could earn US $400 million per year, if the IT companies and freelancers were given incentives, thus liberating the earnings of the industry from the excessive regulation of the relevant institutions.
“They should be allowed to remit back, retain overseas or reinvest their earnings as per the complexities and expediency of exponential business growth in their IT businesses; albeit through the use of formal banking channels. This freeing up of their earned capital should be to the tune of at least 50 per cent,” he added.
Originally published at Urdu Point