The Pakistani government is implementing several tax-related measures to support freelancers and foster the growth of the digital economy.
Finance Minister Muhammad Aurangzeb announced these initiatives during the launch of the Economic Survey 2024-25. These changes aim to streamline tax processes and encourage digital service exports.
IT exporters, including freelancers, can now retain all their foreign earnings and invest abroad without needing permission from the State Bank of Pakistan.
The government is considering extending the 0.25% final tax regime for freelancers until 2035. It is also considering introducing a 3-5 year income tax holiday for freelancers in underdeveloped areas.
The government is also looking at ensuring withholding tax is treated as a final tax to simplify compliance. Additionally, there are proposals to reduce the withholding tax for freelancers earning over Rs5 million annually.
The government plans to launch a dedicated freelancer tax portal to simplify digital tax filing. These measures are designed to boost the digital services sector, which has seen significant growth in exports.