Freelancers send $400m, quietly powering Pakistan’s digital economy

ISLAMABAD: Pakistan’s freelancers sent $400 million to the country during the first nine months of the current fiscal year, playing a growing role in strengthening the economy, Finance Minister Muhammad Aurangzeb said Monday while launching the Economic Survey 2024-25.

The remittances from freelancers are expected to reach $533 million by the end of the fiscal year, equal to about Rs150 billion. The increase, though part of broader IT export earnings, shows that freelancing is quietly becoming an important source of foreign exchange for Pakistan.

The government has introduced major changes to support the digital economy. IT exporters, including freelancers, can now keep all their foreign earnings and invest abroad without getting permission from the State Bank of Pakistan (SBP). While specific data on freelancers is limited, experts say the policy reflects a clear effort to grow Pakistan’s digital services sector.

Ibrahim Amin, chairperson of the Pakistan Freelancers Association (PAFLA), suggested that the government extend the 0.25 per cent final tax regime for freelancers by 2035 to boost freelancers’ confidence, encourage compliance and enhance remittances.

Also, the government should introduce a 3–5 year income tax holiday for freelancers in underdeveloped areas, including Gilgit-Baltistan, South Punjab, and Thar, to encourage regional digital inclusion and socio-economic upliftment through freelancing.

Amin added that the government should ensure that the withholding tax is treated as a final tax, not adjustable or subject to additional returns, aimed at simplifying compliance and protecting freelancers from being taxed twice.

The government should reduce the proposed WHT to 1.0 per cent for freelancers earning over Rs5 million annually via digital platforms (eg, YouTube, Fiverr, Upwork), as the rate of 3.5 per cent is excessive for individuals without corporate-level deductions, he said and added. The government should launch a dedicated freelancer tax portal under the tax authority for a simplified digital tax filing mechanism for freelancers.

The economic survey reveals that the development of Pakistan’s information and communication technology (ICT) sector can be assessed by the presence of over 30,000 IT and IT-enabled services (ITeS) companies registered with the Securities and Exchange Commission of Pakistan as of March 2025. These companies include both domestic and export-oriented enterprises.

During the period from July to March of FY25, ICT services exports increased by $541 million, or 23.7 per cent, reaching a total of $2.825 billion. The IT and ITeS industry achieved a trade surplus of $2.429 billion, the highest among all service sectors in this timeframe, compared to a surplus of $1.997 billion in the previous year. In contrast, the overall services sector recorded a trade deficit of $2.318 billion during the same period.With digital exports rising and easier payment systems in place, freelancers are becoming a reliable part of Pakistan’s economic future.