The budget 2017-2018 is finally here and it has surprisingly come with good news, which is, exemption of taxes on the start-ups. Sales tax will be exempted from startups and software for three years.
Umar Saif, the chairman PITB expressed on Twitter:
“Big win for Pakistan startup ecosystem: Technology companies and startups will be exempted from sales tax for the first three years of their establishment. #Budget2017”
For the new business oriented individuals, it’s wonderful news that startup businesses for the advancement of technology focused products and services are exempted from income tax for the first 3 years. Present activities involved in parallel businesses registered on or after July 1, 2012 are also exempted, This has been done for the promotion of startup culture in Pakistan and also to provide opportunity to the individuals who want to progress in this sector. Rs. 6 billion have also been reserved in the new budget for formation of an IT park which will be made in collaboration with South Korea.
Moreover, along with the tax holidays given to the start-ups, the IT exports (from within Islamabad) will also be exempted from the sale taxes. The finance minister also highlighted that start-ups and also the IT export companies, would be permitted to use foreign exchange accounts in order to fulfill business associated payments outside the country.
Governments in many countries directly support technological development as it proves to be very beneficial and favorable for the economy of the country. As the government of Pakistan has exempted the start-ups from the income taxes in the initial years, this will motivate them to come into the business and grow, and this will, hopefully, eventually bring economic growth into the country. It will also create employment opportunities. The tax exemption at this point in time is therefore a great prospect.