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

14 minutes Read 168 views

Innovation now has a destination in Pakistan- Press...

March 28, 2018

Launched on the 17th of March, Innovation District 92 announced itself as the new hub for innovation and…

View All
3 minutes Read 226 views

Pakistan Global MUN winners secure internships at the...

March 15, 2018

CARE Foundation‘s Student Delegation put forth an outstanding performance at the Pakistan Global MUN.

Our students carried on…

View All
7 minutes Read 278 views

E-Commerce Lounge – Momentum Tech Conference 2018-Buyonpk-Press Release

March 9, 2018

Buyon.pk in collaboration with Pakistan E-Commerce Consortium, organized discussion based activities at E-Commerce Lounge – Momentum Tech Conference…

View All
10 minutes Read 874 views

MyDoctor.pk raises $1.1million in funding from International VC...

February 27, 2018

MyDoctor.pk, Pakistan’s leading online health platform, has announced that it has officially changed its name to oladoc.com.

MyDoctor.pk was…

View All
16 minutes Read 335 views

Company That You Can Start In Less Than...

February 15, 2018

There are various obstacles in the beginning of your personal company. However, cash is not the always certain…

View All

Latest Videos

1 minute Read 313 views

Saad Mahmood, The Technology Guy

March 13, 2018

Saad Mahmood is currently working at Microsoft.He is Microsoft Most Valuable Professional (MVP) and loves technology. Saad has…

View All
1 minute Read 225 views

Saad Mahmood’s Perspective About Women Empowerment !!

March 8, 2018

Saad Mahmood is currently working at Microsoft.He is Microsoft Most Valuable Professional (MVP) and loves technology. Saad has…

View All
Less than a minute Read 466 views

CEO VizRah, Mohammad Adeel Javed, talking about Vizrah...

August 20, 2017

We asked Adeel Javed about his initiative VizRah and how he aims to positively impact the society through…

View All
Less than a minute Read 953 views

Yellow Plate Restaurant introducing fast food with unique...

August 10, 2017

Our team visited Yellow plate restaurant at Shah Jamal market Lahore to tantalize our taste buds. The Owner…

View All
Less than a minute Read 491 views

Views of Khuram Bukhari (Co-Founder Ravvish) about Life,...

August 10, 2017

We conducted a written dialogue about life and success with Co-Founder Ravvish, Khuram Bukhari

View All