Pakistan cuts IT taxes, sets a $15Bn export target for 2030
RIYADH, SAUDI ARABIA — Pakistan’s FY2026 budget extends the 0.25% final tax rate on IT export earnings through June 2029 and cuts advance tax on foreign payments from 5% to 0.5% — a package the software industry expects to drive 20% export growth on top of the $3.8 billion Pakistan recorded in FY2024-25.
According to a report from Arab News, the government has set a $15 billion IT export target for 2030.
Pakistan locks in IT tax certainty through June 2029
The three-year extension of the Final Tax Regime 0.25% rate eliminates the annual renewal uncertainty that constrained long-term planning by Pakistan’s IT exporters — converting a preferred tax measure from a year-to-year contingency into a medium-term policy commitment.
The advance tax cut on foreign payments — from 5% to 0.5% — carries the most immediate operational impact: it directly reduces the cash-flow burden on Pakistan’s roughly 1 million freelancers and smaller software houses that receive international client transfers regularly.
Pakistan’s IT exports grew from $2.6 billion in FY2023-24 to $3.8 billion in FY2024-25 — a 46% increase over two fiscal years — with industry projecting a further 18% gain to $4.5 billion for FY2025-26.
“The extension of the 0.25 percent regime gives the IT sector what it values most — certainty,” said Khurram Schehzad, Adviser to the Finance Minister.
Pakistan’s $15Bn target rests on freelancers and formal software firms
Pakistan’s IT sector employs approximately 1 million freelancers alongside formal software houses — a distributed delivery base that the FTR extension supports by reducing tax friction on international payments across both ends of the ecosystem.
The $15 billion 2030 target implies approximately 25% compound annual growth from the current $3.8 billion base — achievable on the current trajectory if tax stability holds and digital payment infrastructure keeps pace with export volume growth.
Pakistan’s Global Freelancers Union described the advance tax reduction as ‘a major win for remote workers’ — the measure directly easing international transfer costs that have been a persistent friction point for Pakistan’s large independent contractor workforce.
Pakistan’s combination of policy certainty, a growing formal IT sector, and a 1-million-strong freelancer base positions the country as a cost-competitive IT delivery market against regional alternatives facing escalating wage and operating cost pressures.
“All these incentives are very welcoming, and they will bring further growth,” said Sajjad Syed, Chairman, Pakistan Software Houses Association.
For outsourcing buyers evaluating Pakistan as an IT services delivery location, the three-year FTR extension signals medium-term policy stability — reducing the tax uncertainty that enterprise buyers cite most frequently when assessing emerging technology delivery markets.
Pakistan’s million-strong freelancer base and growing formal software sector give buyers optionality across both independent contractor and structured delivery firm arrangements.
