Pakistan considers ten-year tax holiday for freelance techies

Pakistan’s minister for IT and Telecom, Syed Aminul Haque, has floated the idea of a ten-year tax holiday for freelancers, suggesting the move could improve the nation’s services exports. The idea was mentioned in Pakistan's 2021 Draft Freelancing Policy [PDF] and the minister minister raised the idea again last week at a …

[ShadowSystems]

I hope I'm wrong, but...

What's to stop folks from becoming a tech freelancer for ten years, enjoying the tax-free status, then moving abroad for a year or two (to cause your citizenship to lapse as far as the tax authorities are concerned), then moving back & starting the cycle all over again?

How many times can you make use of the tax-free program before the government figures out that you've not paid for decades & yet still consume resources as if you were a normal tax-paying citizen?

I don't see such a program ending well in the long run, but then I hope I'm wrong...

[Ordinary Donkey]

Re: I hope I'm wrong, but...

Greece has a system where if you move to Greece and take your online job with you then you pay lower taxes for $NUMBER years, but only if you've never lived there before. It doesn't seem hard to solve.

[Anonymous Coward]

Re: What's to stop folks ...

Probably the usual stuff. Unexpectedly meeting someone, getting married, perhaps kids, a house, perhaps a great group of friends, sports club, ... or whatever. Maybe they bootstrap their freelance into a real business with employees & all. Doesn't work on everyone, of course, but it's a ratchet nevertheless.

Ten years is more than enough.

[Doctor Syntax]

Re: What's to stop folks ...

A freelance business is a real business like any other..

[Doctor Syntax]

Re: I hope I'm wrong, but...

I suppose the thinking is that if it works, then in ten years time they'll have built up their industry to the point where they don't need to offer the incentive. What happens to the freelancers after that isn't their concern. They're not doing it for the freelancers' benefit.

[doublelayer]

Re: I hope I'm wrong, but...

I think you are. I read this as suggesting the taxes are not collected between 2023-2032, then it goes back to normal in 2033. The hope is that things will be so cheap in the intervening decade that people will get a bunch of business and be in a position to pass the tax payments on to the clients who won't have something to switch to. That would increase the amount of money available to be taxed in the 2030s at the cost of not having the taxes on the money in the 2020s. It's not a window that can be started at any time.

[DevOpsTimothyC]

Re: I hope I'm wrong, but...

It may not be perfect and they are looking at it expiring. It's alot better than HMRC who seem to be giving Meta, Alphabet etc a permanent tax holiday

[smittyreff]

Re: I hope I'm wrong, but...

The idea is certainly interesting, but I would not want to live in Pakestane. I like New York better and ready to pay taxes. Definitely this is my personal opinion. Of course Pakistan is beautiful but I like New York.

[Anonymous Coward]

I think Pakistan would be better off if they fixed their awful record on human rights abuses, and just generally stopped being dicks to people who speak their minds.

[Anonymous Coward]

Pakistan's poor record in developing global technology service firms has little to do with its taxation regime and everything to do with the recent and deep history of extreme political violence and terrorism incidents. It's going to take a bit more than a tax holiday to work through that, though much progress has been made in recent years.

[Irony Deficient]

Re: I hope I’m wrong, but…

What’s to stop folks from becoming a tech freelancer for ten years, enjoying the tax-free status, then moving abroad for a year or two (to cause your citizenship to lapse as far as the tax authorities are concerned), then moving back & starting the cycle all over again?

• Moving abroad does not generally cause a person’s citizenship to lapse, even for purposes of taxation;
• The ten-year tax holiday will not necessarily be extended past the tenth year of the tax holiday.