Business Recorder
Pakistan’s freelancers and digital workers have called on the government to preserve the reduced 0.25% tax rate on foreign exchange earnings for the next ten years, arguing that sustained policy support is essential for the sector’s growth. While giving proposals for the Federal Budget 2026-27, freelancers urged the government to allocate funds for extensive capacity-building and training programmes, establish freelancing hubs in multiple cities, and provide subsidies for internationally recognised certifications. “Extending the 0.25% tax regime for the next decade would encourage freelancers to retain their earnings in local banks and motivate students, young professionals, and women to adopt freelancing as a sustainable source of income,” Pakistan Freelancers Association (PAFLA) chairman Ibrahim Amin said. He pointed out that freelancers registered with the Pakistan Software Export Board (PSEB) pay a tax rate of 0.25% on every foreign remittance received in their bank accounts, whereas a significant majority of freelancers are currently paying 1% tax on their earnings. “PAFLA is ready to work closely with PSEB to simplify and streamline the registration process for freelancers, enabling them to benefit from the incentives introduced by the Ministry of IT and Telecommunication,” Amin said. Citing international recognition of Pakistan’s digital workforce, he noted that the International Labour Organisation (ILO) ranks Pakistan among the world’s largest providers of digital labour. “This achievement is not accidental; it is the result of talent, hard work, and a supportive policy environment,” PAFLA chairman remarked. He emphasised that the 0.25% Final Tax Regime (FTR) encourages freelancer registration, promotes the use of formal banking channels, and increases documented foreign exchange remittances. Any attempt to introduce complex classification mechanisms, self-declaration frameworks, or differentiated tax rates, he warned, would not increase tax revenues. Instead, it could push digital workers toward informal channels, reduce documented remittances, and ultimately weaken Pakistan’s foreign exchange position, Amin added. According to the State Bank of Pakistan (SBP), export receipts generated through freelancing in computer and information services surged to $959 million during July-April FY2025-26, compared to $642 million during the same period of the previous fiscal year, reflecting a year-on-year increase of 49%, or $317 million. Govt urged not to impose additional taxes on content creators Dr Imran Batada, President and CEO of PAFLA, said the government should also refrain from imposing additional taxes on content creators producing knowledge-based content, including skills training, news and analysis, educational content, and infotainment. “PAFLA supports all digital workers contributing to the national economy, including YouTubers and influencers who uphold Pakistan’s cultural values and comply with relevant laws and regulations,” he said. Dr Batada further urged the government to allocate resources for improving payment infrastructure for freelancers, including the development of a globally integrated national payment gateway. He noted that Pakistan is home to the world’s fourth-largest freelancing community, with an estimated three million freelancers. However, many continue to incur significant losses due to high transaction fees and deductions imposed by international freelancing platforms and payment service providers. Noman Ahmad Said, a freelancing coach, said the government should collaborate with the private sector to establish an international-level freelancing platform that would promote Pakistan’s freelancing ecosystem globally and attract foreign clients and digital businesses to engage with Pakistani talent. According to estimates, Pakistan is home to nearly three million full-time and part-time freelancers. Given the country’s large youth population, this number can grow significantly if an enabling environment and adequate support mechanisms are provided. Said emphasised that freelancers must continuously upskill themselves in emerging fields such as artificial intelligence (AI) and cybersecurity to remain competitive and relevant in the global marketplace. “In this regard, the government should design and implement a series of mentorship, training, and capacity-building programmes to guide both existing and aspiring freelancers,” he said.
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