Software sales can generate Rs 1.4b by 2006

KARACHI: The business software development, distribution and sales industry can generate up to Rs 1.4 billion for the government by the year 2006.

However, this substantial fiscal revenue is being lost to software piracy in the country, said the “Study on Copyright Losses in Pakistan” released by Arabian Anti-piracy Alliance (AAA).

“The existing high level of piracy is the main obstacle blocking the industry’s contribution to the government,” said the AAA, a cross industry body representing some of the world’s best-known brands and creative businesses in the Gulf Cooperation Council.

The current level of piracy in Pakistan’s business software market is in excess of 90 percent, said the AAA, which is campaigning governments to introduce legislation to strengthen the hand of enforcement agencies in the battle against counterfeiting and piracy.

The Rs 1.4 billion revenue figure, the study said, includes both the government losses incurred through lost business income taxes and personal income taxes.

It observed that almost the entire business software distribution and sales industry comprises businesses that are undocumented, as they are dealing in illegal, pirated products.

“These undocumented businesses not only deprive the copyright owners of software programmes of their rightful share of revenues but also fail to pay any taxes to the Government of Pakistan.”

The study notes that potential revenue, which may be generated from software distributors and resellers as business income tax, was estimated at Rs 61 million in the year 2002, and Rs 508 million cumulative loss for the years 2002 to 2006.

Business income taxes which could be generated by related upstream and downstream industries were estimated to be Rs 34 million and Rs 23 million respectively in the year 2002, and Rs 286 million and Rs 194 million for the period from 2002 to 2006 respectively.

The upstream industries comprises all those industries which supply goods and services to the business software industry, including software houses, advertising companies, duplication services, printing and packaging. While the downstream industries include software support services, value-added resellers, training and implementation services and consultancy.

Similarly, the study said, the lost personal income taxes accounted for about Rs 32 million for software distributors and resellers, and Rs 9 million and Rs 6 million for upstream and downstream industries respectively in the year 2002. The total potential receipts of personal income taxes for the period from 2002 to 2006 are estimated at Rs. 409 million, the AAA study pointed out.

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