Box 7.4:
Digital Pakistan Policy

Keeping in view the rapid expansion of IT sector in Pakistan, MOITT formulated the Digital Pakistan Policy, which was approved by the cabinet in May 2018. This policy provides a generic framework to synergize the expanding digital ecosystem and harness socio-economic growth in the country. The policy identifies key policy areas and relevant ministries and institutions that would be responsible for execution of these objectives. Currently, the federal government is already offering (or has proposed) several incentives for the IT industry including:

  • (i) Extension of income tax holiday on IT exports till 2025

  • (ii) Reduction in sales tax to 5 percent in Islamabad Capital Territory

  • (iii) 5 percent cash reward on IT exports

  • (iv) 100 percent foreign ownership and 100 percent repatriation of capital and dividends

  • (v) 3-year tax exemption for IT startups

  • (vi) Tax holiday for venture capital funds till June 2024

Among several other objectives, the policy aims to double the country’s IT and ITeS exports by 2020, which may help the country to improve the external account imbalances while also creating employment opportunities. It envisages boosting foreign and domestic investment by making Pakistan an attractive location for IT/ITeS. To incentivize the sector, the policy clearly outlines the need for development of state of the art IT zones/technology parks, incubation centers for tech startups, and Telecenters in unserved and underserved areas in order to enhance mass adoption of ICT services. The goals also include the expansion of e-commerce industry, with an objective to triple the market size by 2020. Among other objectives, this involves establishment of an efficient e-commerce gateway with the help of SBP in order to provide enabling environment to key stakeholders and investors in trade and e-commerce industry.

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