Pakistan’s IT industry is at an important stage. The decisions made today will shape its long-term future.
There is currently a discussion around taxing freelancers. P@SHA has suggested that the government should consider imposing tax on freelancers. While the intent may be to broaden the tax base, I believe this approach needs more careful consideration of ground realities.
Freelancers are not separate from the system. They are part of how the system has evolved. The focus should be on strengthening the overall ecosystem, not increasing pressure on one segment of it.
Tax Policy Should Strengthen, Not Weaken the Ecosystem
A well-balanced and predictable tax structure for IT employees and companies can create wider economic benefits.
When the tax environment is stable and fair:
- Companies are better able to retain skilled professionals in Pakistan
- Employment becomes more stable and sustainable
- Professionals feel more confident building long-term careers locally
This stability directly improves productivity and reduces talent loss.
It also enables companies to reinvest more into:
- Product development
- Team expansion
- Training and innovation
- Entry into new business areas
Currently, many companies manage a significant portion of their financial operations outside Pakistan, while only operational funds are routed locally. A more supportive environment could encourage deeper local reinvestment and stronger economic circulation within the country.
Freelancing Is a Structural Outcome, Not a Trend
Freelancing in Pakistan did not grow in isolation. It grew as a response to real conditions in the traditional job market.
Many professionals experienced:
- Low or stagnant salaries
- Long working hours without fair compensation
- Unpaid or undervalued extra effort
- Delayed salaries in some cases
- Sudden layoffs without proper notice
Over time, many skilled individuals explored global platforms to find more stable and flexible income opportunities. Freelancing became a practical path for them.
This is not about preference alone. It is about system design.
The Gap for New Graduates Is Still Unresolved
Every year, thousands of students graduate in IT-related fields.
But the transition into the industry is still weak:
- Entry-level jobs are limited
- Internships are not widely available
- Industry experience is hard to access
At the same time, freelancing platforms are highly competitive and saturated, which makes them difficult for beginners.
There is also another concern. Some companies and training centers have turned internships into paid programs, where students are charged money to get internship experience instead of being hired and paid for real work. This creates a financial barrier for fresh graduates instead of supporting them.
As a result, many capable students struggle to find their first real opportunity.
Freelancers Face Financial and Banking Friction
Even after entering global markets, freelancers continue to face operational challenges such as:
- Difficulty opening and maintaining USD accounts
- Confusion in banking purpose codes
- Delays in receiving international payments
- Lack of transparency in transaction processing
- Settlement delays that can take days or weeks
These are not small issues. They reduce efficiency and add uncertainty to income flow.
Unfortunately, these challenges are still not a priority in most policy discussions.
Role of P@SHA and Industry Representation
P@SHA plays an important role in representing the IT industry and engaging with policymakers. However, there is a growing concern about the current focus.
Instead of prioritizing broader structural issues such as job creation, balanced taxation, and banking challenges, the attention appears to be shifting toward advocating taxation on freelancers.
At the same time, the representation of the wider IT ecosystem often feels limited. Recognition through a small number of awards for established companies, while valuable, does not fully reflect the diversity, challenges, and realities of the broader industry.
This raises an important question about how inclusive and balanced the current representation is, and whether all segments of the ecosystem are being adequately heard.
A More Effective Direction
A stronger contribution from industry representation bodies could include:
- Engaging in balanced tax discussions that support both companies and employees
- Improving financial infrastructure for freelancers and digital workers
- Supporting structured pathways for fresh graduates entering the industry
- Encouraging fair and accessible internship opportunities
- Helping retain more economic activity within Pakistan
- Ensuring wider inclusion in policy conversations
These areas can have long-term impact on the health of the ecosystem.
Potential Risks of Overlooking Ground Realities
If freelancers are taxed without addressing structural challenges:
- Some professionals may shift financial activity outside Pakistan
- More individuals may rely on foreign banking systems
- Friction in the system may increase informal workarounds
- Trust in local infrastructure may gradually weaken
The outcome may not align with long-term economic goals.
Final Thought
The IT sector works best when all parts of the ecosystem grow together.
Employees, freelancers, and companies are all shaped by the same environment.
A more balanced approach would focus on:
- Fair and stable taxation
- Strong financial infrastructure
- Accessible opportunities for new graduates
- Inclusive industry representation
Pakistan’s IT ecosystem does not need added pressure on one group. It needs stronger foundations that allow everyone to grow together.
Tahir Shahzad
Tahir Shahzad is a Product Manager, Product Owner, and technology consultant with over a decade of experience helping startups and organizations build products people actually use. If you are working on a product problem worth solving, reach him at tahirshahzad.com/contact/
