IT professionals denounce unfair tax policies

KARACHI:

IT professionals fear that taxing employees and computer equipment amid soaring inflation is a mistake. They say the government should exempt these groups of people from taxes and urge politicians and bureaucrats to cut back on luxury spending and adopt austerity measures.

The recent budget has been criticized for its lack of creativity and vision. Experts warn that it prioritizes short-term gains over long-term stability. This approach could harm the country and push highly skilled professionals abroad, exacerbating the brain drain.

“The budget is unfair to the working class and harsh on any group that plays by the rules. The message seems to be: either leave the country or endure a lot of suffering. To get ahead, you have to be corrupt or dishonest. This will likely lead to a brain drain, pushing our best minds to other countries while we are left with average talent,” said Salman Lakhani, Founder and CEO of Cubix.

Lakhani highlighted a 119% increase in the number of educated people leaving the country over the past year, with passport applications now taking up to three months to process. This alarming trend could worsen if current policies continue, potentially pushing companies to shift investments and seek talent elsewhere.

“If politicians care about the future of the country, they must consider the long-term effects of their decisions. This budget is a step in the wrong direction if there is any hope of improvement,” Lakhani added.

Pakistan Software Developers Association (P@SHA) President Muhammad Zohaib Khan has stressed the need for reforms to facilitate foreign remittances for the IT sector and the economy in general. He pointed out anomalies in the current tax laws, such as the increase in GST on imports of laptops and desktops, which portend a bleak future for Pakistan’s IT sector.

P@SHA also highlighted the tax anomalies faced by information technology exporters under the Final Tax Regime (FTR), which imposes additional tax rates on overseas payments, hampering their efficiency and competitiveness.

Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Atif Iqbal Sheikh has expressed serious concerns over the recently announced federal budget for 2024-25, saying it would aggravate brain drain in the IT sector due to high taxation, stifling growth and innovation.

Despite repeated assurances from the incumbent government, FPCCI’s budget proposals for the IT industry have been completely ignored, further frustrating industry players, Sheikh said.