The current tax regime for IT exporters is set to expire on June 30, 2026. The absence of a clear plan for its renewal in the recent 2025-26 federal budget is creating a climate of uncertainty that could jeopardize future growth and foreign investment.
While Pakistan’s IT exports are soaring to new heights, a significant source of concern is casting a shadow over this impressive growth: the current tax regime for IT exporters is set to expire on June 30, 2026. The absence of a clear plan for its renewal in the recent 2025-26 federal budget is creating a climate of uncertainty that could jeopardize future growth and foreign investment.
The languages only differ in their grammar, their pronunciation and their most common words. Everyone realizes why a new common language would be desirable: one could refuse to pay expensive translators. The European languages are members of the same family.
This policy vacuum has serious implications for the sector’s future.
Deterrence for Foreign Investment: International investors look for stability and long-term predictability when choosing a market. The possibility of a sudden shift to a higher tax rate could make Pakistan a less attractive destination compared to competitors like India, Vietnam, and the Philippines, which offer robust, long-term tax incentives.
Impact on Business Growth: IT companies, from large-scale software houses to startups, use future tax liabilities to plan their budgets, reinvest in technology, and expand their operations. Without a clear tax policy, companies may become hesitant to take on long-term contracts or make significant investments in talent and infrastructure, potentially stalling the very growth the government is trying to promote.
The Brain Drain Dilemma: The uncertainty could also exacerbate the issue of talent retention. A favorable tax regime is part of a larger package that makes a country an appealing place to build a career. If the financial benefits diminish, skilled professionals may be more inclined to seek opportunities in countries with more stable and rewarding tax environments.
The IT industry, through its representative bodies like the Pakistan Software Houses Association (P@SHA), has been actively lobbying the government to provide clarity and announce a long-term, predictable tax policy. They argue that a short-term solution is not enough and that the sector needs a permanent, or at least a multi-year, tax holiday to truly unlock its potential and compete on a global scale.
The 2025-26 budget, however, failed to address the extension of this crucial tax benefit. For an industry that thrives on stability and long-term planning, this ambiguity is a major setback. It sends a mixed signal to investors and businesses who rely on a clear policy framework to make decisions. The silence on this issue raises the question: what will happen after 2026?
The path forward requires the government to recognize that a thriving IT sector is not just about short-term revenue collection but about long-term economic transformation. Providing a clear and consistent tax regime is a small price to pay for securing the industry’s future and ensuring that Pakistan continues its journey from an emerging market to a global tech powerhouse. The ball is now in the government’s court to provide the certainty that the industry desperately needs to maintain its record-breaking momentum.
But those frustrations are now fuelling Truman as he looks to fulfil his long-standing ambition to represent Great Britain at the Olympics.
This evolution has been guided by a series of ambitious government initiatives—most notably the “Cloud-First” policy and the recently unveiled National AI Policy.
The real success story in Pakistan isn’t just about the tech itself—it’s about the people building it.
A Tax on Progress: How a New Digital Tax Threatens Pakistan’s IT Sector
