The lowest cost of conducting business in the IT sector is in Khyber Pakhtunkhwa, making it the best province for IT sector incentives.
According to research by the Pakistan Software Houses Association, Khyber Pakhtunkhwa is the province that treats the IT sector the best regarding the percentage of taxes levied on services. The PASHA report said that Khyber Pakhtunkhwa has the lowest sales tax among other provinces for the three primary IT services.
IT & IeT services and BPO services are subject to a 2 percent sales tax in the province of Khyber Pakhtunkhwa. Only a 2 percent sales tax is applied to startups in the province. According to the PASHA report, the three primary IT services in BalochistanIT & IeTs, BPO(s) services, and startupsare subject to a 6 percent sales tax.
Moreover, IT and IeT products are subject to a sales tax of 13% in Sindh, a BPO sales tax of 3%, and a startup sales tax of 3%. The Sindh government has provided the software/IT-based consultants with the choice between a 13 percent sales tax with input adjustment and a 3 percent without input adjustment in the Finance Act FY23.
Punjab’s revenue department charges a sales tax of 5% on all IT & IeT services and new businesses, while the highest tax rate is 16% on BPOs. While the federal government charges a 15 percent sales tax on BPOs and a 5 percent sales tax on startups and IT & IeT services.
Moreover, a Memorandum of Understanding (MoU) was signed by the Khyber Pakhtunkhwa IT Board and Amazon Web Services Inc. last week (AWS). The collaboration intends to help the KPK government advance the digital advancement of the province.
The KP government will be able to comprehend how cloud technology functions and apply it to diverse settings to increase its effectiveness, dependability, and security at a lower cost.