According to CEO of Excellence Delivered (ExD) Pvt Ltd Sajjad Syed, almost 40 percent of the IT firms in Pakistan have shifted their operations to the UAE, due to the 8 percent additional rise in taxes on revenues, made effective by the government since last year. This step has not only slowed down the progress in the Pakistani IT sector, rather companies now prefer to move their entire business elsewhere.
Sajjad Syed further reflected upon this measure as detrimental to the local IT sector. “The decision of imposing the tax on IT services to generate additional revenues is actually proving to be fatal as several small companies have moved their offices to Dubai, a tax haven and only 1.5 hours away from Pakistan.”
He further added that “This will not bode well for the IT sector as the growth of this booming industry has already been stunted and companies are seriously re-evaluating their expansion plans in Pakistan.”
He also added that countries around the world take measures to facilitate companies flourish rather than taking steps that stunt the progress,“There is no other country in the world which has levied taxes on revenues of IT services companies. As a matter of fact, they are subsidising the IT sector. We are not demanding a subsidy but such high rates of tax are hurting growth prospects.”
He also mentioned that this step is not helping the government in its revenue collection. On the contrary, it is failing and going in foreign hands. “It is Dubai that is seeing an increase in employment and business – not Pakistan.”
He emphasized upon conducting research and the adverse effects this will have on employment and overall progress of the IT sector here. “Its contribution could be in danger as companies that have moved to Dubai have little compulsion to hire a Pakistani, they can hire an Indian or Sri Lankan for the same job.”
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