The Pakistan Freelancers Association has warned the federal government against introducing higher taxes or strict regulations on freelancers in the upcoming budget.

The association said sudden tax changes could badly affect Pakistan’s growing freelance and remote work industry. It added that freelancers are playing an important role in bringing foreign exchange into the country.

According to PAFLA, Pakistan’s freelance sector generated nearly $900 million during the first nine months of the current fiscal year. The organization expects annual IT and digital exports to cross $1 billion soon.

The statement came days after Pakistan Software Houses Association withdrew its proposal related to ending the 0.25 percent tax loophole used by some remote workers.

PAFLA said the freelance economy has expanded because of better banking systems, awareness campaigns, policy support, and cooperation between public and private institutions.

The association revealed that freelance earnings have increased sharply from nearly $450 million in 2022. Pakistan’s remote workforce is now becoming more active in global digital markets.

PAFLA also warned that complex tax systems and heavy compliance requirements may force freelancers to use informal payment channels. This could reduce documented foreign exchange inflows for Pakistan.

The organization added that excessive regulations may damage trust in banks, increase talent migration, and slow down Pakistan’s digital export growth.

PAFLA urged the government to hold detailed discussions with stakeholders, including the Ministry of Finance, Ministry of IT, and the Federal Board of Revenue before introducing any new freelancer tax policy.

The association stressed that protecting freelancers and digital exporters is necessary for Pakistan’s economy, youth employment, and long-term IT sector growth.