The announcement of the freelancer tax in Pakistan 2025 has sparked concern across the country’s digital workforce. As the FBR enforces a 15% tax on freelance income, many feel this move targets the very professionals driving Pakistan’s booming digital economy. While taxation is necessary in theory, freelancers argue they’ve been left unheard and unsupported. In a move that’s left the country’s booming freelance community stunned, Pakistan’s Federal Board of Revenue (FBR) has introduced a controversial new tax policy targeting IT exports and freelance income. With Pakistan’s freelance sector contributing over $400 million annually, many now fear the decision could disrupt a fragile but fast-growing digital economy.
Pakistan’s IT Freelancers Hit Hard by FBR’s New Tax Move
Late last week, the FBR issued a notification that brings freelance income under a 15% income tax slab, ending what was previously a tax-exempt status for many individuals earning through online platforms like Upwork, Fiverr, and Toptal. Previously, IT and software exports including freelance services enjoyed zero tax until 2024 under government policies meant to promote digital skills and export growth.
Now, the government says it’s time for the sector to contribute its “fair share.”
“Freelancers were never meant to remain tax-exempt forever,” said one FBR official during a press briefing. “Pakistan needs revenue, and the digital economy must be part of the tax net.”
But freelancers aren’t convinced and many say they were blindsided by the sudden change.
Pakistan’s Freelance Boom: A Digital Gold Rush Under Threat?
Pakistan has become one of the world’s fastest-growing freelance markets, ranking 4th globally according to the Payoneer Global Gig Index. With limited local job opportunities and rising youth unemployment, many young Pakistanis turned to freelancing as a lifeline.
From web development to content writing and digital marketing, the sector exploded over the past five years thanks to low startup costs and high foreign demand. Cities like Lahore, Karachi, Islamabad, and even second-tier towns like Faisalabad and Sialkot have seen thousands of youth earning foreign income through their laptops.
But now, freelancers say the tax policy feels like punishment rather than progress.
“We bring in dollars. We don’t use government infrastructure. Why tax us like this?”
Hassan Raza, a freelance web developer in Rawalpindi
How the New Tax Works
According to the FBR circular, freelancers earning over Rs. 600,000 annually (~$2,000) will now be required to register with the tax authority and file income tax returns under the IT export category. This applies to all kinds of digital services including:
- Web & App Development
- Content Writing & Design
- Digital Marketing
- SEO Services
- Virtual Assistance
- Social Media Management
Previously, freelancers could receive payments through bank inflows without taxation, so long as they declared the income under “IT services.” With the new rule, they now face up to 15% tax on annual earnings, depending on their income bracket.
Some fear this move may push freelancers back into the cash economy or encourage undocumented transactions, which the government has struggled to regulate.
Could the Freelancer Tax in Pakistan 2025 Hurt IT Export Growth?
In the past two years, Pakistan’s IT exports crossed $2.6 billion, with freelancing forming a significant part of this figure. The new policy, say analysts, might not increase revenue in the short term but could instead discourage freelancers from using official channels.
“This policy could backfire,” warns Zafar Khan, an IT consultant based in Lahore.
“People might start using crypto wallets, gift cards, or informal systems like Hawala again.”
Transparency or Target? Why Freelancers Feel Singled Out
While the government insists the move is part of broader “economic documentation,” critics argue it’s poorly timed. With inflation running high and job markets tight, freelancing has been one of the few viable options for young people especially women working from home.
“This isn’t just about money. It’s about trust,” said Sana Imran, a freelance content writer from Multan.
“We’re willing to pay tax, but where’s the support? Where is the digital policy that supports our development?
Anger has been heightened by the absence of consultation with important parties, such as PASHA, the Pakistan Software Export Board (PSEB), and significant freelance associations.
Social Media Backlash Over Freelancer Tax Policy
Social media platforms have seen a fierce backlash in response to the news. Over the weekend, Pakistani Twitter (X) trended hashtags like #FreelancersTax, #FBRPolicyFail, and #DigitalPakistanOrTaxPakistan.
Tech entrepreneurs and digital activists expressed concern on LinkedIn, stating that if policies continue to feel inhospitable to digital workers, brain drain may worsen.
What Freelancers Want from the FBR After the 2025 Tax Policy
Freelancers are now calling for:
- A lower fixed tax rate (3-5%) to start
- Tax holidays or rebates for first-time filers
- Access to health insurance, pension, and social protections
- Clearer definitions on which digital services qualify under IT exports
- Inclusion in policymaking via associations like PASHA
Without this, many say, the policy will only increase undocumented earnings and lower IT export growth, defeating the purpose of the tax net.
What’s at Stake for Pakistan’s Digital Economy?
This is about Pakistan’s reputation as a global tech hub, not just freelancers. Pakistan appears to be following a different path than other nations, such as Bangladesh, Egypt, and India, which are providing incentives to entice remote and freelance talent.
“We keep saying ‘Digital Pakistan,’ but our policies keep saying otherwise,” says Ali Murtaza, a freelance video editor.
With global demand for remote work rising, Pakistan has a chance to position itself as a digital hub but only if its policies match its ambitions.
Bottom Line
The implications of the freelancer tax in Pakistan 2025 are far-reaching, potentially reshaping how the digital workforce operates. For better or worse, this tax policy may mark a sea change. In theory, there is no argument against paying taxes, but Pakistani freelancers feel ignored, unsupported, and unheard. This could be a setback rather than a new chapter in the development of IT unless the government interacts with the freelance community, fosters trust, and provides appropriate incentives.
For now, one thing is clear: Pakistan’s digital future depends on how it treats its most agile, adaptable, and export-ready workforce.
FAQ: Freelancer Tax in Pakistan 2025
Q: Do freelancers in Pakistan have to pay tax in 2025?
A: Yes, the FBR now applies a 15% tax on annual freelance income over Rs. 600,000.
Q: Can freelancers reduce their tax burden?
A: Freelancers can explore tax rebates, register as IT exporters, or advocate for a lower flat rate through associations.
