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National Freelancing
www.pseb.org.pk
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www.moitt.gov.pk
www.techdestination.com

Facilitation Policy
2021
TechdestiNationPakistan

Consultation Draft TechDestPak


Table of Contents

1. List of Acronyms 3
2. Preamble 4
3. Pakistan’s Freelancing Landscape: 4
4. Policy Vision 6
5. Policy Objectives 6
6. Strategy Implementation 7
7. Key Components 7
a) Business development and ICT Exports 7
b) Facilitation 7
c) HR Development & Entrepreneurship 7
d) Legislations 7
e)
f)
g)
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Women Empowerment 8
Facilitation for the differently-abled community
Empowerment of remote and underserved areas
8. Fiscal & non-fiscal incentives for the Freelancers:
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9. Policy Implementation & Reviews 10
10. Annexure-1 11
11. Roles and Responsibilities 11
12. References 13
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2 | National Freelancing Policy 2021


List of Acronyms

» APAC – Asia Pacific

» FBR – Federal Board of Revenue

» CIR – Committed Information Rate

» GoP – Government of Pakistan

» ICT – Information Communication Technology

» ITeS – Information Technology Enabled Services

» MoITT – Ministry of Information Technology and Telecommunication

» P@SHA – Pakistan Software Houses Association

»
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QA – Quality Assurance
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PSEB – Pakistan Software Export Board

PTA – Pakistan Telecommunication and Authority


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» SBP – State Bank of Pakistan

» SECP – Securities & Exchange Commission of Pakistan

» SMEs – Small and medium size Enterprises


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» STPs – Software Technology Parks

» TDAP – Trade and Development Authority of Pakistan

» VoIP – Voice Over Internet Protocol

» VPN – Virtual Private Network

3 | National Freelancing Policy 2021


1. Preamble: group of prominent freelancers has also been
The growth of the Information Technology sought while preparing this draft.
(IT) and Information Technology enabled
Services (ITeS) sector is vital for Pakistan’s Pakistan’s Freelancing Landscape:
economic development. This sector has Freelancers have registered remarkable
tremendous potential and is expected to growth in numbers and income during recent
reach its set target of US$ 5 Billion in IT & ITeS years. The telecom infrastructure expansion
export remittances within the next three years. across the country has played a pivotal role in
The Government of Pakistan has invested freelancers’ development. This is now getting
heavily in this sector, especially in the last two global acknowledgment, a reputation for
decades, resulting in laying the foundations reliable and cost-effective IT and IT-enabled
for developing a knowledge-based economy services delivery. Freelancers from Pakistan
and digitally empowered society through the are ranked 3rd globally and have become
use and adoption of inclusive, affordable, and increasingly popular due to quality of work
sustainable technology. and cost-effectiveness compared to other
competing countries.
IT & ITeS export remittances surged to $1.23
billion during FY 2019-20, including US$150 As per ‘The 2020 Freelancer Income Report’
million earned by freelancers. Whereas, in the by a Payoneer, the role of technology advances
first seven months of the current FY 2020- and shifting work paradigms are fueling
21 (July 2020 – January 2021), freelancers’ a surge in freelancing with collaborative
export remittances have rapidly increased
to US$ 219 Million and are expected to cross
US$ 350 Million by the end of FY 2020-21. It is
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estimated that, at present, around 100,000
“active” freelancers (who at least make $100 a
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technologies making it easier for remote
workers to communicate and contribute.
Online marketplaces are making it easier for
freelancers to find work. Cross-border payment
platforms make it easier for freelancers to get
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month) are working from Pakistan and earning paid for their services, regardless of the client’s
valuable foreign exchange for the country. location. Whether an individual is making
To increase Pakistan’s freelancer’s footprint the shift from a full-time salaried position or
globally and gain a larger share of the global working to supplement an existing job with
outsourcing business, it is essential to devise some extra income, freelancing presents a
and implement a National Freelancing Policy. wealth of opportunities.
This would enable freelancers to work within
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a supportive framework duly aligned with According to an international survey, the


enhancing demand generation and supply worldwide average hourly rate charged by
of IT & IT enabled Services to the international freelancers is US$ 21, showing that freelancing
markets worldwide. is providing an attractive earning potential
that, in many cases, far exceeds average wages,
With the right policy interventions, the especially in emerging economies. The most
number of freelancers in Pakistan can be popular fields of work for freelancers are web
increased tenfold in few years, generating self- development, graphics designing (30%),
employment for talented youth, bolstering IT & computer programming (19%), IT services
ITeS export remittances, and spurring economic (10%), multimedia production (8%), content
growth of the country. writing (8%), translation (7%), marketing (6%),
admin (3%), customer support (2%), project
The policy has been drafted by MoITT through management (2%), sales (2%), quality assurance
its departments PSEB, Ignite, and IT Wing (2%) and finance (1%).
of MoITT in consultation with the National
Freelancing Policy Committee comprised of In this digital world, freelancers have recognized
the representatives from SECP, SBP, FBR, and that they can earn a significant income and
Ministry of Commerce. Input from a working gain more freedom over their working and

4| Consultation Draft - National Freelancing Policy


employment conditions, with the ability to Freelancers’ Definition
choose projects and create a more excellent Freelancer is a type of self-employment where
work-life balance no matter where they are the individual works for themselves, carry
located. Likewise, businesses realize that having out temporary jobs / projects / contracts /
a growing freelancers’ workforce can provide assignments / tasks and relate to professions
them with the flexibility to scale and quality such as web development, software
service when costs need to be cut. development, graphics designing, computer
programming, IT services, multimedia
production, content writing, translation,
The United States of America is one of the marketing, IT solutions administration,
leading freelancing countries. According to the customer support, project management, sales
study “Freelance Forward 2020” carried out by activities, quality assurance, financial services,
Payoneer, 59 million Americans were engaged research activities, news reporting, medical
in providing freelancing services during the last services, interpretation, commercial advisories,
fiscal year, which makes up 36% of the USA’s tech consultancies, financial consultancies,
total workforce, generating $1.2 trillion in annual attorney services, etc. using IT platform and
earnings from freelancing. Research finds that software/tools to provide services in-country
hard skills, soft skills, and business skills are and globally.
fundamental to be a successful freelancer.
Most freelancers in the USA are aged between
18 to 22 years, followed by 23 to 38 years old, 39
to 54 years old, and 55+. Whereas in Asia, the
number of freelancers under the age of 35 is alot
higher, reflecting the potential of freelancing in
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countries such as Pakistan.
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Freelancing is also playing a pivotal role in
closing the overall mean gender pay gap in
earnings. The mean hourly rate of female
freelancers is 84% (in APAC 85%) of the male’s
mean hourly rate freelancers across all fields.
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5| Consultation Draft - National Freelancing Policy


2. Policy Vision: adoption rate for learning, upscaling,
To make Pakistan a leading enabler and and skill practice.
top marketplace for freelancing with 2. To introduce digital banking,
ease of doing business, carrying out skills e-payments, access to financial
development, capacity building, broad basing instruments, and capital, especially
the technology jobs to all corners of Pakistan low-interest loans for freelancers.
ensuring equitable inclusion all genders and 3. To provide income tax holiday to PSEB
abilities wealth generation, the economic well- registered freelancers till 2030.
being of the citizens and the achievement of 4. To increase access to health insurance,
sustainable economic growth of the country. life insurance, and employee liability
insurance through subsidies and
3. Policy Objectives: Government incentives.
• On average, each US freelancer is earning 5. Making employee liability insurance
$21000 per annum while the same for available in the country reducing
Pakistan is approximate stands @ US$ operational risks of the freelancers both
3500 per annum per active freelancer per locally and internationally
year, 100,000 freelancers’ active freelancer iii. HR Development and Entrepreneurship
approx. 1. To strengthen and build qualified
• Building the number of active freelancers human resources through capacity
in Pakistan to 1 Million freelancers and building and skill training programs.
increasing the average earning rate to 2. To create a registry of local freelancers
$5,000 per annum will potentially add
$5.0 Billion of export remittance inflows in
Pakistan every year.
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• This policy aims to provide a framework for
this target and accelerate its achievement
t through a registration portal and
facilitating them by providing them a
platform to interact with the local and
international market.
3. Increasing dispensable income of the
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by facilitating the freelancers and population at large.
increasing wealth creation for themselves, iv. Legislations
their families, villages, and towns, and 1. Designating policy stakeholders and
earning valuable foreign exchange for the the policy review board’s formulation
country. to create a legal & litigation framework
suited to the freelancers.
i. Business Development v. Women Empowerment
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1. To establish Pakistan as a leading 1. To empower the women and encourage


freelance market globally by creating them to start or resume their careers as
the transparent governance model, freelancers.
framework & policies and providing vi. Persons with Disabilities
International access to markets, 1. Enabling the inclusion of persons with
projects and clients. disability, retired and semi-retired
2. To bridge the gap and facilitate individuals, and the transgender
freelancers to interface with governing/ population.
regulatory authorities to enable vii. Empowerment of Remote and
business ease. Underserved Areas
3. To introduce a robust marketing 1. Ensuring the inclusion of remote
strategy & promotional plan for areas, small towns, underserved
freelancers. areas, secondary and tertiary cities
4. Increase in service exports and foreign for economic development, wealth
exchange of the country. creation, and reducing the gap with
ii. Facilitation metropolitan cities.
1. To enable a digital-ready environment
across the country and increase the

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4. Strategy Implementation and private sector organizations will
1-Key Components collaborate on providing subsidized
a) Business development and ICT Exports health and life insurance to PSEB
To provide business opportunities to registered freelancers through existing
freelancers, the following strategic and future initiatives.
actions can be planned. • PSEB and relevant Governmental
• PSEB in collaboration and facilitation and private sector organizations will
with other governing bodies like M/o collaborate on providing collateral-free
Commerce, M/o Interior, and TDAP loans to PSEB registered freelancers
to organize inbound and outbound through existing and future initiatives.
delegations, IT exhibitions/meetups, • Establishment of facilitation desk at
roadshows, etc. through offered to PSEB and PSEB operated software
freelancers for their participation at technology parks for addressing matters
seminars, global exhibitions, trade related to registrations, taxations, dispute
fairs, and expos, allowing freelancers to resolution, etc.
showcase their portfolios and creating • PSEB, in collaboration with relevant
partnerships enabling to increase their Government and private sector
revenues. organizations, will work on enabling
• Multiple freelance marketplaces to linkages of PSEB registered freelancers
operate from Pakistan to compete with local and foreign investors.
against the international freelancing • PSEB, in collaboration with the Securities
platforms, ensuring competition,
which will reduce platform fees and
provide multiple channels of revenue
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for Pakistani freelancers. This will also
provide strategic security to this sector
t and Exchange Commission of Pakistan,
will simplify the process of registering
a Single Member Company and offer
a fee discount to the PSEB registered
freelancers.
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by lowering dependence on foreign-
owned freelancing platforms. c) HR Development & Entrepreneurship
• Provide digital banking channels to • In partnership with other public and
freelancers in opening bank accounts, private sector organizations, Pakistan
enabling e-payments and access to Software Export Board will launch new
other financial instruments, increasing training and technology certifications
export remittances, simplifying outward initiatives for the local freelancers.
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remittances for purchasing services/ • PSEB will create partnerships with


software/ tools/ digital platforms. multinational technology companies
(Tech MNCs) for subsidizing the course
b) Facilitation: materials and certifications, making
• PSEB will provide low-cost registration such material available to the local
and renewal @ Rs. 1,000 and 3,500, freelancers.
respectively, per annum and will facilitate
ease-of-doing-business through tax d) Legislations
incentives and other subsidies offered by i. Foreign Remittances
the Government. • PSEB, in collaboration with the State
• PSEB and relevant Government bodies Bank of Pakistan (SBP), will work to
will provide special visa facilitation to streamlining inward foreign exchange
freelancers with a record of a minimum remittances from freelancing activity
of three years of IT & ITeS export using freelancing defined codes by
remittances exceeding the US $5,000 SBP, which are subjected to income tax
per annum through formal banking exemptions.
channels. • PSEB will work with SBP for the
• PSEB and relevant Governmental allowance of foreign exchange bank

7| Consultation Draft - National Freelancing Policy


account opening for PSEB registered related to the payment and other legal
freelancers. and commercial disputes.
• It is proposed for SBP to enable the iv. Intellectual property and Data Protection
retention of 35% of foreign exchange Policy
income received as an inward remittance • It proposed to ensure the inclusion
in these foreign exchange business of freelancers and their digital and
accounts of the freelancers. physical products and services, brands
• PSEB will work with the Finance Ministry and trademarks, and any other
and Federal Board of Revenue to ensure intellectual properties in the National
the foreign exchange export remittances Data Protection Policy and Intellectual
received in freelancing codes will remain Property Policy in consultation with all
income tax exempted till 2030. associated stakeholders.
• SBP to mandate local banks to ensure
the foreign exchange payments received e) Women Empowerment
in the freelancers’ business account is • It is proposed to emphasize promoting
reconciled with the corresponding local training and work from home
PKR deposit in the recipient’s account. enablement for women and girls across
These recipients should not face any the country.
hassle in obtaining Proceed Realization
Certificates (PRCs) for such remittances. f) Facilitation for the differently-abled
• It is proposed for SBP to allow community
freelancers to use documents such as
bank statements, transaction history,
or freelancer marketplace payments
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transaction statements in obtaining
PRC documents from the banks within
t • It is proposed that a national survey
be conducted enquiring the specially-
abled population about their willingness
and requirements for training, capacity
building, and enablement for adopting
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72 hours. freelancing as a career choice.
• It is recommended for SBP to instruct • It is proposed to ensuring free-of-cost
the commercial banks to ensure Internet bandwidth be made available for
adopting mechanisms of tracking and PSEB registered transgender freelancers
recording the transaction proceeds from and specially-abled freelancers across
freelancing activities both from local and Pakistan.
international sources. Freelancers must
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not face any difficulties in providing g) Empowerment of remote and underserved


the complete traceable records of areas
such transactions to any government • It is proposed for mapping the telecom
organization. penetration through existing and future
ii. Financial Inclusion Government initiatives in urban and
• Facilitation of freelancers may also rural areas to ensure the provisioning
include access to bank loans, credit cards, of subsidized internet services for PSEB
leasing services, and ease of sending registered freelancers working in remote
payments abroad against services, and underserved areas.
software purchase, online platform • It is proposed to subsidize IT equipment
usages, and other similar business costs such as personal use laptops and
expenses. home networking equipment for the
iii. Local Escrow PSEB registered freelancers working in
• It is proposed to establish an Escrow remote and underserved areas.
cell in collaboration with PSEB, SBP, • It is proposed to run awareness programs
and other concerned authorities for on the district level to encourage
addressing the challenges of freelancers students, women, and others to start
and their local and international clients their careers as freelancers.

8| Consultation Draft - National Freelancing Policy


2- Fiscal & non-fiscal incentives for the to the PSEB registered freelancers
Freelancers: through commercial banks and financial
It is necessary to re-align the government institutions at subsidized rates.
strategies to attract a reasonable chunk • It is proposed that the facility of
from global spending on outsourcing subsidized health and life insurance
and freelancing services in Pakistan. This be made available to PSEB registered
will help create thousands of new jobs for freelancers under existing and future
freelancers in different sectors in line with Government and private initiatives.
the current Government policy of creating • It is proposed that PSEB registered
high-end and well-paying white color jobs freelancers be included in any home
for youth employed in the digital economy. loan schemes under the existing
and future Government and private
Presently, specific Government incentives initiatives subject to providing a record
for freelancers are lacking, and thus there of a minimum of 5 years of freelancing
is a need to consider incentives for the exports remittances of more than
freelancers to create a favorable business $10,000 per annum. Such home loan
environment. facilities shall be provided to these
qualified freelancers at a subsidized loan
a. Fiscal Incentives: rate.
Fiscal incentives for freelancers are • It is proposed for the provinces and
recommended in consultation with the the Federal Capital revenue boards to
working group of prominent freelancers
and freelancing community representatives.
Ministry of Information Technology and
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Telecommunication (MoITT) will recommend
these proposals for inclusion in the relevant
t implement a reduced sales tax rate, not
exceeding 2%, against the local services
revenue earned by the PSEB registered
freelancers. It is further proposed that
this sales tax payment shall only be due
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documents such as Finance Bill and State at invoice month end plus 60 days.
Bank of Pakistan and SECP regulations etc.,
after due process. a. Non fiscal incentives:
• Income tax holiday on export income/ • It is proposed that Visa facilitation shall be
revenue/receipts of freelancers, duly provided for PSEB registered freelancers
registered with PSEB till 2030, subject whose export income/revenue for the
to receipt of income/revenue through last three years exceeds US$ 5,000/- for
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formal banking channels in the specific each year and is remitted through formal
purpose codes assigned by the State banking channels.
Bank of Pakistan. • Fast track and simplified opening
• Introduction of incentivized registration of Foreign Currency bank accounts
fee package for freelancers by PSEB and for PSEB registered Freelancers and
access to PSEB programs and initiatives, retention of 35% foreign exchange in
including free and subsidized training, these bank accounts.
certifications, subsidized office space at • It is proposed to establish Technology
Software Technology Parks (STPs) across Business Branches of commercial banks
the country, and access to international in at least six Pakistan cities where
marketing and matchmaking technology-aware bank staff can help
opportunities. freelancers. PSEB can work with SBP and
• It is proposed for SECP to introduce a commercial banks in providing relevant
20% registration fee discount for PSEB training for the staff of these branches.
registered freelancers if they opt to • It is proposed to establish facilitation
register a Single-Member Company. desks at PSEB offices and PSEB
• It is proposed to make available operated Software Technology Parks
collateral-free loans up to Rs. 1.0 Million for freelancers to quickly resolve their

9| Consultation Draft - National Freelancing Policy


issues pertaining to taxation, banking, 3- Policy Implementation & Reviews:
Intellectual Property rights, Voice Over • The policy implementation will require
IP Whitelisting, Virtual Network Access consistent monitoring and evaluation of
(VPN), or any other legal or commercial its outcomes. However, an appropriate
matters. strategy will also be prepared to align the
• It is proposed Revenue Boards for ‘Action Plan’ with key priority areas for
PSEB to established a free centralized proper monitoring and evaluation. MoITT
VPN gateway service which Pakistan will encourage provincial departments
Telecommunication Authority will and bodies to use this National
whitelist to provide services to verified Freelancing Policy as a guideline for their
freelancers registered with PSEB. own freelancing facilitation initiatives.
• It is proposed that IP whitelisting is Provinces can identify their unique
available for Voice over IP (VoIP) traffic for requirements and implementation
PSEB registered freelancers, where the frameworks. However, broad alignment
VoIP traffic must not exceed 200 kbps. to the National Freelancing Policy may
• It is proposed to ensure the provisioning be pursued. Requisite measures will be
of Committed Information Rate (CIR) adopted to cope with the continuous
Internet bandwidth service by the ISPs/ inclusion of the latest trends and
telco operators packaged under “Work technologies; one such step will be to
from Home Packages” with a minimum ensure the policy review every three
of 20 Mbps connection at subsidized years to keep it relevant, vibrant, and up-
prices to be made available to PSEB
registered freelancers.
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10 |Consultation Draft - National Freelancing Policy


Annexure - 1

Roles and Responsibilities Matrix

4- Roles and Responsibilities:


• Implementation of the National Freelancing Policy will involve multiple ministries and
departments. Considering the engagement of multiple ministries and departments, it is
appropriate to align the relevant bodies with their specific roles and responsibilities for
clarity. Responsibilities/assignments being proposed as part of this policy which is attached
at Annexure-1.

Lead Ministry/ Facilitating Ministries/


S.# Policy Initiative
Department Departments/ Bodies
Income Tax Holiday on • Ministry of IT and
• Ministry of Finance
export income/revenue Telecommunication
• Federal Board of
1 of freelancers registered • Pakistan Software Export
Revenue
with PSEB for till 2030 Board
starting from FY 2021-22
Introduction of
incentivized registration • Ministry of IT and
2
fee package for
Freelancers by PSEB and
access to PSEB programs
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and initiatives etc.

20% registration fee


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Ministry of IT and
Telecommunication

• Securities and

Telecommunication
Pakistan Software Export
Board
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Exchange
discount by SECP to
Commission of
freelancers registered • Pakistan Software Export
3 Pakistan
with PSEB if they opt to Board
• Ministry of IT and
be registered with SECP
Telecommunication
as an SMC (Pvt) Ltd.

Collateral free loans to • Ministry of IT and


freelancers’ registered Telecommunication
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• Ministry of Finance
with PSEB by scheduled • Pakistan Software Export
• State Bank of
banks and financial Board
4 Pakistan
institutions at special rates • Financial Institutions
• Kamyab Jawan
up to Rs. 1 Million loans • Microfinancing &
without any collateral/ commercial banks
guarantee.
The facility of health
and life insurance • Sehat Insaaf • Ministry of IT and
to PSEB registered Program Telecommunication
5
freelancers under relevant • Ehsaas Initiative • Pakistan Software Export
Government initiatives or Board
programs.

11 |Consultation Draft - National Freelancing Policy


Lead Ministry/ Facilitating Ministries/
S.# Policy Initiative
Department Departments/ Bodies
• Ministry of IT and
Visa facilitation for PSEB Telecommunication
registered freelancers • Pakistan Software Export
whose export income/ Board
revenue for the last three • Ministry of Foreign • Ministry of Interior
6
years exceeds US$ 5,000/- Affairs • Ministry of Overseas
for each year and is Pakistanis and Human
remitted through formal Resource Development
banking channels. • Pakistan Software Export
Board
Fast track and simplified
• Ministry of Information
opening of Foreign
Technology &
currency bank accounts
Telecommunication
7 for PSEB registered State Bank of Pakistan
• Pakistan Software Export
Freelancers and 35%
Board
foreign exchange
• Commercial Banks
retention.
• Ministry of Information
Establishment of
Technology &
8
Technology Business
Branches of commercial
banks in at least six cities
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of Pakistan.

Facilitation Desk at
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State Bank of Pakistan


Telecommunication
Pakistan Software Export
Board
Commercial Banks
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PSEB offices and STPs • Pakistan Software Export
for Freelancers for quick Board
resolution of their issues • Pakistan
Ministry of IT and
9 pertaining to taxation, Telecommunication
Telecommunication
banking, Intellectual Authority
Property rights, IP • Intellectual Property
Whitelisting, or any other Office
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matters.
Free VPN gateway for • Pakistan
verified Freelancers Telecommunication
registered with PSEB to Ministry of IT and Authority
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get VPN access through Telecommunication • Pakistan Software Export
PSEB operated VPN Board
gateway.
• Pakistan
IP whitelisting for VoIP Telecommunication
traffic to PSEB registered Ministry of IT and Authority
11
Freelancers not exceeding Telecommunication • Pakistan Software Export
384 kbps traffic. Board

12 |Consultation Draft - National Freelancing Policy


Lead Ministry/ Facilitating Ministries/
S.# Policy Initiative
Department Departments/ Bodies
Committed information
rate (CIR) bandwidth
internet service from ISPs/ • Pakistan
telco operators packaged Telecommunication
as “Work From Home” Ministry of IT and Authority
12
with minimum 20 Mbps Telecommunication • Pakistan Software Export
connections – Special Board
subsidy can be availed in • Internet Service Providers
case of PSEB registered
freelancers.
PSEB registered
freelancers be included in
any home loan schemes • State Bank of Pakistan
under existing and future • Commercial Banks
Government and private • Pakistan Software Export
13 initiatives subject to a Ministry of Housing Board
minimum of 5 years and Works • Other financial
of freelancing exports Institutions
remittance record of
more than the US $10,000
annum.
The provinces and the
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Federal Capital charge
a reduced sales tax rate

t Federal Board of
• Pakistan Software Export
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not exceeding 2% against Board
Revenue
the local services revenue • Ministry of Information
14 • Provincial Revenue
earned by the PSEB Technology &
Boards
registered freelancers. The Telecommunication
payment of this sales tax
to be due at invoice month
end plus 60 days.
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References:

1. The 2020 Freelancer Income Report’ - Payoneer


2. Freelance Forward 2020 - Upwork

13 |Consultation Draft - National Freelancing Policy


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Pakistan Software Export Board | Office No.2, 2nd Floor,


Evacuee Trust Complex, F-5 Agha Khan Road | Islamabad, Pakistan

+92 (51) 920 4074, Fax : + 92 (51) 920 4075

info@pseb.org.pk

www.pseb.org.pk, www.moitt.gov.pk, www.techdestination.com

TechdestiNationPakistan

TechDestPak

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