Pakistan’s information technology sector could face a significant increase in its tax burden under the upcoming Federal Budget 2026-27, with top sources indicating that the government is considering raising the tax rate on IT companies from 0.25 percent to 1 percent. If approved, the move would effectively increase the tax burden by 300 percent for the country’s growing digital industry.
According to informed sources, the proposal is currently under consideration as part of the government’s broader revenue measures. The possible increase comes at a time when Pakistan’s technology sector has been delivering strong export performance and emerging as one of the country’s key sources of foreign exchange earnings.
Data from the Pakistan Economic Survey 2025-26 shows that ICT export remittances reached $3.388 billion during the July-March period of FY2025-26, reflecting a nearly 20 percent increase compared with $2.829 billion recorded during the same period of the previous fiscal year. The steady growth has reinforced the sector’s importance to the national economy and its potential to attract further investment.
Pakistan’s freelance economy has also maintained impressive momentum. Official figures indicate that freelancer remittances surged by 51 percent year-on-year to $856.3 million, highlighting the increasing contribution of the country’s digital workforce to export earnings and foreign exchange inflows. Industry experts believe that supportive tax policies are essential to sustaining this growth trajectory.
The proposed tax hike comes only days after the Pakistan Freelancers Association called on the government to preserve favorable taxation for freelancers and the wider digital economy in the Federal Budget 2026-27. In its recommendations to the Federal Board of Revenue and the Ministry of Finance, the association urged authorities to retain the existing 0.25 percent tax rate on foreign exchange earnings for at least the next decade.
PAFLA also recommended the establishment of dedicated freelancing hubs in major cities, subsidies for internationally recognized professional certifications, and new initiatives to strengthen digital skills development. The association argues that maintaining a competitive tax regime is crucial for expanding exports, encouraging investment, and strengthening Pakistan’s position in the global technology and freelance markets. The government has yet to make a final decision on the proposal, with further clarity expected during the federal budget presentation.
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