In a bid to support and promote the flourishing freelance industry in Pakistan, the Pakistan Freelancers Association (PAFLA) has urged the government to alleviate the tax burden on freelancers. PAFLA highlights the significant contribution of freelancers in earning foreign exchange for the country through their work on various projects for international clients. The association has submitted a budget proposal to the government and relevant authorities, calling for the removal of the variable tax rate imposed on freelancers.
The current tax structure imposes a variable tax rate ranging from 1% on return filers to 2% on non-filers on every income transaction received by freelancers in their bank accounts. PAFLA argues that this tax not only diminishes the overall income of freelancers but also undermines their efforts in generating foreign exchange. Many freelancers in Pakistan work on various freelancing platforms that already deduct fees at different rates. Additionally, money transfer services also charge fees, further reducing their income.
In the last financial year of 2021-2022, freelancers contributed $400 million to the Pakistani economy. PAFLA estimates that this year, freelancers will likely match or exceed this value by the end of the current financial year. Recognizing the importance of this sector, it is crucial for the government to support and encourage freelancers by easing the tax burden they currently face.
To facilitate freelancers, PAFLA suggests that the government directs commercial banks to provide free services to freelancers in the country. This would enable freelancers to maintain their accounts directly with Pakistani banks, rather than receiving their income through indirect channels from different countries. By eliminating additional fees associated with international transfers, freelancers can retain a larger portion of their earnings.
Furthermore, PAFLA proposes the allocation of dedicated workstations for freelancers at IT parks and Special Technological Zones. These workstations would provide freelancers with subsidized and fast internet services, as well as opportunities for networking and knowledge exchange with professionals in their respective fields. Such dedicated spaces would foster a collaborative environment, enhancing the productivity and growth potential of freelancers.
PAFLA also calls on the government to encourage more banks to introduce forex accounts for freelancers. These accounts would offer freelancers credit facilities for undertaking major projects with foreign partners, enabling them to expand their business horizons. Additionally, banks should introduce special savings accounts tailored for freelancers. These accounts would allow freelancers to maintain a credit history, which could then be utilized to access services such as auto and house financing.
Pakistan is currently ranked as the 4th largest workforce of freelancers in the world, with approximately 3.5 million freelancers providing services across various fields. This thriving freelance community contributes significantly to the country’s economy and has the potential for further growth. By alleviating the tax burden on freelancers and implementing supportive measures such as dedicated workstations and specialized banking services, the government can foster an environment that empowers freelancers and maximizes their potential.
Read more: Government Free Funded Courses Available During Vacations In Pakistan
In conclusion, the Pakistan Freelancers Association (PAFLA) advocates for the easing of taxes on freelancers in Pakistan. With their substantial contribution to the country’s foreign exchange earnings and their potential for further growth, freelancers deserve governmental support. By removing the variable tax rate and implementing measures such as free banking services, dedicated workstations, and specialized accounts, the government can create an enabling environment for freelancers to thrive, thereby bolstering the economy and reinforcing Pakistan’s position as a hub for freelance talent.
