Government prolongs 0.25% concessional tax regime, aiming to strengthen IT exports and support freelancers, software houses, and digital economy expansion
ISLAMABAD: The federal government has officially extended the Final Tax Regime (FTR) concession on IT and IT-enabled services exports until June 30, 2029, under the Pakistan Budget 2026–27.
This decision continues the reduced tax rate of 0.25 percent on IT export revenues, which was earlier set to expire on June 30, 2026. The move reflects the government’s strategy to strengthen the country’s fastest-growing digital sector.
Relief for Digital Economy and Export Sector
According to the budget announcement, the IT and digital services industry remains a key pillar of Pakistan’s export economy. The sector includes software houses, freelancers, startups, and IT-enabled service providers who contribute significantly to foreign exchange earnings.
By extending the concessional tax regime, the government aims to provide long-term policy stability and encourage sustained growth in exports.
Officials highlighted that the digital economy has become one of Pakistan’s most promising sectors, driven by rapid global demand for remote services, software development, and outsourcing solutions.
The continuation of the low tax regime is expected to improve competitiveness in international markets and attract further investment.
Government Focus on Long-Term Digital Expansion
The extension of the FTR concession has been approved in view of the Prime Minister’s focus on developing Pakistan’s IT sector.
Authorities stated that fiscal space created through improved economic management has allowed the government to support export-oriented industries more effectively.
Policy makers believe that consistent tax incentives will help reduce uncertainty for businesses operating in the digital space, enabling them to plan long-term projects and expand operations.
Boost for Youth Employment and Freelancing Sector
The government also expects the policy to benefit young professionals and freelancers, who form a major part of Pakistan’s digital workforce. With stable tax incentives, more individuals are likely to enter the IT and freelancing market, further increasing export potential.
Experts suggest that the extension until 2029 could play a crucial role in accelerating Pakistan’s transition toward a knowledge-based economy, strengthening both employment opportunities and foreign exchange inflows.
