Pakistan’s software industry welcomes tax incentives and digital investment measures but calls for urgent reforms to unlock long-term growth.
Pakistan’s technology industry has received significant support in the federal budget 2026-27, but industry leaders warn that unresolved structural issues could slow down future growth. The Pakistan Software Houses Association (P@SHA) has welcomed several tax measures while urging the government to address critical gaps.
The government has extended the reduced 0.25 percent tax rate on IT exports until tax year 2029, providing the sector with a three-year policy outlook. The reduction of advance tax on foreign card transactions from 5 percent to 0.5 percent is also expected to benefit freelancers and IT companies working with international clients.
P@SHA highlighted tax relief for startups, reduced tax burden on salaried IT professionals, and an increase in the super tax exemption threshold from Rs150 million to Rs500 million as major positive steps.
The budget also allocates substantial resources for digital skills development, with more than Rs10 billion expected to support initiatives focused on artificial intelligence and youth training.
However, the association raised concerns over missing reforms, including the lack of a clear legal definition for freelancers and remote workers. It also pointed out that weak frameworks for venture capital and private equity investment continue to limit foreign funding opportunities.
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