The IT and software industry in Pakistan is a rapidly growing export sector, contributing significantly to the economy. From software houses and SaaS startups to freelance development teams and offshore service providers, IT firms operate in a high-margin, project-based environment. However, many firms struggle to stay compliant with evolving tax laws, especially regarding exports, foreign remittances, and government certifications.
This article outlines the accounting and tax services IT and software firms need throughout the year to manage finances, stay compliant, and take advantage of tax incentives.
Tracks project-wise and client-wise revenue
Monitors foreign remittances and export income
Ensures compliance with FBR, SECP, and PSEB
Supports investor due diligence and valuation for tech startups
Allows firms to claim tax exemptions and refunds properly
Record income from software development, maintenance, consultancy, and SaaS subscriptions
Reconcile bank statements, Payoneer, Wise, PayPal, and Stripe accounts
Categorize revenue by project, geography, or client
Maintain ledgers for salaries, tools, subscriptions, and infrastructure expenses
Process employee and freelance developer salaries
Deduct payroll taxes under Section 149
Manage salaries in multiple currencies (USD, PKR, AED)
Maintain payroll records and payment schedules
Deduct withholding tax on vendor payments where applicable (e.g., rent, legal services)
Generate CPRs and issue WHT certificates
Ensure compliance under Section 153 and Section 155
IT/ITeS services are exempt from sales tax if registered with PSEB
If not exempt, firms must file monthly sales tax returns
Maintain input/output tax records where applicable
File Nil returns or exemption-based returns properly
Prepare client-wise or service-wise profit and loss statements
Monitor SaaS revenue, burn rate, and profitability
Analyze monthly recurring revenue (MRR), churn, CAC, and LTV
Provide dashboards or summaries for partners or investors
Estimate and pay advance income tax under Section 147
Adjust against year-end liability
Avoid penalties or default surcharge
Prepare expense forecasts for HR, cloud infrastructure, and R&D
Allocate resources for upcoming projects, renewals, or hiring
Plan for expansion or fundraising
File corporate income tax return under Section 114
Declare all local and export income
Claim foreign remittances as tax-exempt if registered with PSEB
Submit wealth statement and personal returns for directors
Prepare audited or management financial statements
Include P&L, balance sheet, and cash flow statements
Required for tax filing, funding rounds, or investor due diligence
File Form A (Annual Return) and Form 29
Hold annual board meetings
Update corporate structure or registered office changes
Assist in preparing working papers for external audit
Provide documentation on foreign transactions, client contracts, and licensing costs
Comply with investor or grant audits
Register as a Private Limited Company or AOP
Obtain NTN and STRN from FBR
Register with Pakistan Software Export Board (PSEB) to avail export benefits
Get PSEB Exemption Certificate for tax-free export income
Apply for tax exemption under Clause 133, Part I, Second Schedule
Maintain record of inward foreign remittances and bank certificates
Renew exemption annually with updated financials
File for input tax refund on internet, cloud software, office rent, and electricity
Maintain supporting documents and vendor invoices
Use FASTER system or provincial portals
Track income from international clients (US, UK, UAE, EU)
Maintain invoices, contracts, and remittance records
Comply with US 1099 forms or EU VAT obligations if applicable
Structure operations to minimize global tax exposure
Build models for fundraising, startup valuation, or M&A
Plan for SAFE notes, equity issuance, or ESOPs
QuickBooks Online / Xero – ideal for SaaS and export-driven firms
Wave / Zoho Books – suitable for startups and freelancers
Synder / A2X / Stripe Atlas – integrations for global e-commerce and SaaS
Notion / Airtable / Trello – for internal finance tracking and reporting
Access to professionals experienced in IT export tax laws
Accurate tracking of multi-currency transactions
Avoids penalties, audits, and FBR notices
Provides investor-grade financial reports
Helps claim exemptions and refunds smoothly
Q: Are IT firms in Pakistan exempt from tax?
Yes, export income from IT/ITeS companies registered with PSEB is exempt under Clause 133 until June 2025 (subject to compliance).
Q: Is it mandatory to register with PSEB?
It’s not mandatory but highly recommended to avail tax exemption and export recognition.
Q: What taxes are applicable to freelance or SaaS income?
Income from foreign clients is taxable if not exempted. Freelancers should file returns and may benefit from reduced tax on export proceeds.
Q: Can IT firms claim input tax refunds?
Yes, if not exempt, they can claim input tax paid on business-related expenses. Exempted firms usually file Nil returns or no input claims.
Q: Should SaaS or tech startups file sales tax?
SaaS services offered within Pakistan may attract sales tax under PRA, SRB, or KPRA unless exempt. Exported SaaS may be tax-exempt with proof.
IT and software businesses in Pakistan have unique accounting and tax needs that require specialized handling. Whether you’re exporting code, building SaaS platforms, or working as a tech freelancer, structured financial records and timely compliance help you scale, secure funding, and save on taxes. By working with experienced tax professionals and using smart tools, IT firms can remain audit-proof, investor-ready, and fully compliant in a rapidly evolving regulatory environment.
