Till June 2019, the Federal Government has proposed to extend the exemption on exports of IT products and services while this proposal was given in federal budget for 2016-17.

According to the proposal, IT is an emerging sector and it requires support to flourish. The current situation is the main reason for this proposed tax exemption on IT sector till June 2019.

But it is also mentioned in federal budget that availing this tax exemption will make it necessary for these IT companies to retain 20% of their revenues in other countries for meeting their expenses while 80% of the revenue must be send to Pakistan through banks.

Another proposal that could not make its place in the budget was the reduction of 8% tax on service companies to 2%.

Due to several taxes in Pakistan, around 40% IT companies have shifted their headquarters to places like UAE due to lower taxes. These companies have back offices in Pakistan and billings in UAE which is hurting the government efforts to collect taxes.