Pakistan Cuts Withholding Tax to 0.5% to Boost IT Exports and Support Freelancers

In a major step to promote IT exports and support freelancers, Pakistan has significantly reduced the withholding tax on international payments from 5% to 0.5%. The decision was approved during a meeting of the Foreign Currency Account Regime Committee, chaired by Planning Minister Ahsan Iqbal, as part of the government’s efforts to strengthen the country’s digital economy and create a more investor-friendly environment for the IT sector.

During the meeting, the committee approved several key policy measures aimed at enhancing Pakistan’s position as a competitive global technology hub. The reduction in withholding tax will ease the financial burden on IT companies and freelancers, making it more affordable to receive international payments and conduct cross-border business.

Pakistan Cuts Withholding Tax to Boost IT Exports and Support Freelancers

The committee also approved measures to encourage investments to be brought into Pakistan through the formal banking system. The initiative is intended to improve transparency, strengthen financial flows, and increase the country’s foreign exchange reserves.

Speaking at the meeting, Ahsan Iqbal said the government’s vision is to establish a world-class, investor-friendly ecosystem for Pakistan’s IT industry.

He added that the proposed Special Foreign Currency Account Scheme is designed to strengthen the digital economy while increasing Pakistan’s foreign exchange reserves. The scheme is expected to provide greater financial flexibility for IT exporters, software companies, startups, and freelancers, encouraging export earnings to be routed through official banking channels.

The latest reforms underscore the government’s broader strategy to accelerate IT exports, attract foreign investment, and position Pakistan as a leading destination for technology services and freelance talent.

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