The country’s IT industry experts-including exporters, policymakers, and academia-have called for the development of a National Data Exchange Layer and the adoption of the Pakistan Digital Stack to advance the country’s digital governance and economy.
They emphasized the need for tax rationalization on digital infrastructure and services to attract investments and secure a prosperous digital future. Among the key suggestions is fixing tax rates on digital infrastructure for at least 10 years, ensuring they remain competitive with other countries.
One of the central proposals is to reduce the General Sales Tax (GST) on digital payments to 5% from the current 18% on cash transactions. This would reduce operational costs, formalize the economy, and increase transparency and tax collection. In addition, stakeholders suggested that Pakistan’s corporate tax rate be reduced from 29% to below 20%. A lower tax regime would attract investments, promote innovation, and increase FDI as the country would become regionally competitive.
Infrastructure boost and simplification of regulations
To enhance digital inclusion, experts suggested increasing access to the Internet and mobile phones, especially among women, through PPPs. Programs such as installment-based smartphones and low-cost options were proposed to bridge digital divides.
The reduction of complex foreign exchange regulations was to attract multinational tech companies to Pakistan. Easier procedures for IT firms would make international businesses hire local talent and grow, contributing to Pakistan’s economic growth.
Payroll taxes for IT firms should be capped at 6-8%, reduced from the current 24-25%. This would help businesses reinvest in talent development and infrastructure and gain competitiveness against regional players such as India.
Legal reforms were also recommended, like the creation of commercial courts and dispute resolution tribunals to reduce processes for international companies. For attracting venture capital, it was proposed that 20 years of capital gains tax exemption be offered for startups. Pakistan will thus emerge as a competitive hub akin to Singapore.
These initiatives, detailed in the P@SHA white paper, would create a proper and comprehensive digital roadmap toward an economically prosperous Pakistan: with a vision to focus on innovation, investment, and inclusive economic growth.
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