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An IT services company refers to the application of business and technical expertise to enable organizations in the creation, management, and optimization of or access to information and business processes. The distinct categories of IT services include business process services, application services, and infrastructure services.
The Information Technology sector in Pakistan is a growing and developing industry with significant potential for future expansion. Information Technology (IT) broadly refers to the use of computers, storage, networking, and other physical devices, infrastructure, and processes to create, process, store, secure, and exchange all forms of electronic data. The term is commonly used in the context of business operations rather than for personal or entertainment purposes. Commercial use of IT includes both computer technology and telecommunications, encompassing an array of technologies and related disciplines. Over time, each of these IT components and functions has grown increasingly complex, incorporating diverse technologies and methodologies.
The IT industry in Pakistan is a booming sector, with export remittances of IT and IT-enabled services (IT-eS) reaching $1.11 billion, reflecting a growth rate of 20.75% and contributing approximately 1% to Pakistan’s GDP, estimated at $3.5 billion. According to the State Bank of Pakistan, software exports alone are currently valued at $700 million. The Digital Policy 2018 and Pakistan Vision 2025 aim to further boost the IT sector by fostering its development and integration into the economy.
In order to promote the IT Sector in Pakistan, the government has introduced several incentives, beneficial for IT and IT-eS professionals. The Government of Pakistan offers lucrative tax incentives to IT startups including zero income tax on IT and ITeS exports till June 2025 as per Clause 133 of Second Schedule of the Income Tax Ordinance 2001. Other tax exemptions are available to startups which register themselves with the Pakistan Software Export Board (PSEB), such as being exempted from tax for three years in profits and gains derived by a startup, as per Section 143 of Second Schedule of Income Tax Ordinance 2001. Other incentives given to the IT sector include:
The Securities & Exchange Commission of Pakistan (SECP) is a regulator responsible for overseeing the corporate sector, including the incorporation of all public and private companies. The incorporation process consists of the following steps:
The first step is to reserve a suitable name as per Section 10 of the Companies Act 2017.
Applicants must propose three names that meet the specified criteria for approval. The reservation can be made either: As a separate application (fee: Rs. 200 for e-application or Rs. 500 for physical application), or Alongside the application for incorporation (no extra fee). Upon submission and payment, the registrar examines the proposed names. If approved, a certificate is issued reserving the name for 60 days, during which the application for incorporation must be submitted.
As mentioned earlier, an application for incorporation of a company can be submitted either separately or alongside the application for name reservation. The fee for incorporation is determined by the type, capital, and size of the company as per the Seventh Schedule of the Companies Act 2017. The application must be accompanied by the following documents:
For online applications, all relevant documents must be scanned and uploaded, except the memorandum and articles, which will be generated online.
After submission of all relevant documents, the registrar will examine them to ensure completeness and compliance with the requirements. Upon satisfaction, the registrar will register the memorandum and other documents and issue a certificate of incorporation, signed and authenticated with the official seal.
Previously, a separate application was required to obtain an NTN number from the FBR. However, the SECP has introduced a one-window facility where data collected by the SECP is sent directly to the FBR for NTN registration.
While registering an IT/ITeS company with the PSEB is optional, it is essential for availing the tax exemptions mentioned earlier. The registration process involves:
1. Creating a login on the PSEB website.
2. Filling out and submitting the online registration form along with the required documents for initial approval.
3. After receiving PSEB approval, uploading the requisite fee payment receipts for final approval.