Sindh Government Continues to Drive Away Exports and Employment from the Province

The Sindh Government has announced through the Sindh Budget 2017-18 that it plans to continue imposing sales tax on exports of Information Technology enabled services (commonly known as call centers and BPO services).

This treatment is unique to only Sindh where exports and foreign exchange earning businesses are discouraged or asked to move their operations to other provinces or countries. This bizarre policy move by the Sindh government has baffled both the industry and experts while commentators remain unclear as to the motives behind such a move.

It is worth mentioning that no other province has imposed sales tax on exports of services and the Federal Government has, in fact, announced a 3-year income tax exemption for new Information Technology & Information Technology Enabled Services companies through the Federal Budget 2017-18 and subsequent Finance Bill 2017. The Federal Government has also announced sales tax exemption on exports of IT Services from Islamabad and other Federal territories. The Income Tax Ordinance on the other hand already grants export income tax exemption till 30 June 2019 to all exporting Information Technology & information technology-enabled service companies.

Pakistan Software Houses Association for IT & ITES (P@SHA) had been in talks with the Sindh Government and Sindh Revenue Board on the matter of export services sales tax imposition for over a year, and a long due favorable policy announcement was expected through the Sindh Budget 2017-18.

The announcement however through the Sindh Budget 2017-18 proposes to reduce the export sales tax from current 13% to new 3%, but not abolishing it like other provinces.

This has raised concerns over Sindh Government’s commitment tocreatingjobs in the provinceand increasingexports.
Sales tax, being a consumertax,isnot to be borne bythe serviceproviderand isintended to
be paid by the customer. Therefore sales tax application remains a matter for domestic sales and in export scenarios where the customer is not in Pakistan. The Sindh Government, in a first of its kind move, wants businesses in Sindh to pay sales tax on exports, which translates into paying a consumer tax from the service provider’sown pocket.

The State Bank of Pakistan has issued a 10-month (July 16 to April 17) exports data for IT & ITES which stands at USD 532.91 million out of which call centers contribute USD 67.09 million.

Bulk of these export will now either move to other provinces or tax friendly countries, depriving Sindh of the potential export opportunities and employment for thousands of local young individuals.

About P@SHA Pakistan Software Houses Association for IT & ITES (P@SHA), is the trade association representing the Pakistan IT & ITES sector. P@SHA is associated with & recognized by institutions such as the World Information technology and Services Alliance (WITSA), ASOCIO (Asian Oceanic Computing Industry Organization) and APICTA (Asia Pacific ICT Alliance). With over 450 member companies nationwide, P@SHA has been the voice of the industry,advocatingpolicyinitiativesandworkingtowardscreatingahighgrowthsustainable businessenvironmentfor the tech sector in the country.


News of the day

5 minutes Read 77 views

French President Macron launches tech visa for startups

June 25, 2017

PARIS: New French President Emmanuel Macron has launched a technology visa for startup founders, employees and investors in…

View All
5 minutes Read 50 views

Botsify: A Pakistani Startup Making Its Way Into...

June 24, 2017

Artificial Intelligence (AI) is an emerging field that has been making waves in the tech industry all around…

View All
7 minutes Read 647 views

Airfrov gets funded by East Ventures

June 21, 2017

Airfrov is a Singapore based startup that gets travelers to bring back overseas products for customers, eliminating many…

View All
7 minutes Read 397 views

Japan Receives Pakistani Auto Rickshaws

June 19, 2017

It is a common practice to see people in Pakistan importing cars from foreign countries, especially Japan. However,…

View All
3 minutes Read 90 views

WhatsApp for iPhone has just been updated

June 16, 2017

The popular messaging app is introducing an array of interesting new features such as photo filters, automatic albums…

View All

Latest Videos

Less than a minute Read 65 views

Editors at Perspective about Social Impact

June 5, 2017

Perspective had in house talk with the editors in which they discussed about the importance of social impact…

View All
Less than a minute Read 62 views

Tripfinder Gets funded

May 30, 2017

Tripfinder is a Karachi based company and they got funded and here is the dialogue which was hosted…

View All
1 minute Read 91 views

A Talk with Founders of VizRah & Aloo...

May 30, 2017

Perspective hosted a dialogue with the Founders of youth initiatives like Aloo Clan and VizRah in which the…

View All
Less than a minute Read 104 views

Entrepreneurship Development Program, A talk with Bankers &...

May 11, 2017

Perspective hosted a dialogue with Bankers and investors in ten days training program with emerging Entrepreneurs during Entrepreneurship…

View All
Less than a minute Read 114 views

Entrepreneurship Development Program, A talk with Bankers

May 10, 2017

Perspective hosted a dialogue with Bankers in ten days training program with emerging Entrepreneurs during Entrepreneurship Development Program…

View All