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hussain114
Community Member

Question Tax Exemption for Pakistani Freelancers

Hi there,

 

I've a question about tax exemption in Pakistan for Pakistani freelancers offering IT services.

 

I visited my tax consultant recently to file my tax returns for tax year 2019.

IT services are definitely 100% exempted from tax till year 2025, but to my surprise my tax consultant said that any income generated through IT services is fully taxable in Pakistan 'UNLESS' membership is acquired from Pakistan Software Export Board (PSEB).

 

I consulted PSEB, they said they don't offer membership to invididual freelancers, but if an individual freelancer can form a sole proprietorship company, then PSEB membership can be acquired easily.

And then you've to open a new business bank account and report all earnings to PSEB with Form-R and few other supporting documents.

 

And this is how an individual freelancer offering IT services in Pakistan can avail 100% tax exemption. This all sounds fine, but my concern is that the same tax consultant never gave me the same information earlier and now he's saying that all previous earnings are fully taxable just because I didn't had PSEB membership, which no one ever communicated to me, not even the same tax consultant ever told me before. And in fact not even 'Income Tax Ordinance 2001 - 2019 Amendment' states this in article 133 where it talks about income tax exemption on IT services.

 

I need input from other fellow pakistani freelancers on this.

Also please tell me did you know about above information before & if you've formed a company to avail tax exemption or are you still working without a company?

 

(I'll probably add more thoughts to this post as I consult with few more people).

Thanks

243 REPLIES 243
imyounas
Community Member

AA, 

I transfered some amount from my personal Payoneer to Meezan bank and on the PRC my Purpose Code is '0401'. 

I checked with the bank and requested it to change to '9186' but they told me as this transaction is from your personal Payoneer account to your personal local bank account therreore they can't change it to '9186' 

Can someone please guide me here , how you are transfering from Payoneer to Pakistan bank account nad getting correct code i.e. 9186 ?

 

Thanks,

Imran

 

 

 

I'm having the exact same issue, not getting the purpose code 9186. I contacted Payoneer and the local bank here, but none of them were able to help with that.

 

Did you find any solution for that problem? Please let me know. Thanks!

ayazakhtar
Community Member

I am also having the same issue. I think we need to open proper freelancer bank accounts in Pakistan.

As of 2024, State Bank of Pakistan has introduced Freelancer accounts. For example check the HBL and Meezan bank pages. 

https://www.meezanbank.com/freelancer-accounts
https://www.hbl.com/personal/accounts/current/hbl-freelancer-digital-account

The important point to be noted here is that you have to get ESFCA (Exporter’s Special Foreign Currency Account) account. Bank staffs here in Pakistan are not fully informed of this new change so be very specific when you open the bank account.

89c4c4c9
Community Member

IT services are not exempt now but at one time they were exempt. Now they are subject to final tax regime and tax rate in 0.25% but it subject to certain conditions. so IT people need to be aware of these things.

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