LAHORE: Small and Medium Enterprises Development Authority (SMEDA) has proposed an export credit guarantee insurance scheme, besides increasing the income tax exemption and decreasing corporate tax for SMEs in the upcoming federal budget.
SMEDA CEO Muhammad Alamgir Chaudhry said here Wednesday that SMEDA, as an SME promotion agency had developed budget recommendations for Fiscal Year 2015-16 and submitted to the Ministry of Industries and Production, Ministry of Finance and Federal Board of Revenue, seeking special attention for SMEs in the federal budget.
He said that the proposals have been developed in consultation with SME stakeholders, trade associations, and chambers of commerce and industry.
He said that salient of the direct tax budget recommendations included increase in income tax exemption limit up to Rs 0.6 million, increase in cash withdrawal limit up to Rs 100,000 and reduction in corporate tax to 30 percent and 20 percent for small companies.
Reduction in Withholding tax on profit on deposit and rationalization and incentives for import of machinery for SME sector have also been recommended. Furthermore, he said, reduction in sales tax rate on raw material and other procedural measures had been proposed to ease the cost of doing business for the SMEs.
Alamgir Chaudhry said to enhance SMEs integration in global value chain, various measures had been recommended to reduce tariff barriers. In order to enhance SMEs share in total exports, he added, an export credit guarantee insurance scheme had been proposed to protect exporters from external risk.
Incentives for the SMEs to obtain quality certification and patent registration, access to modern technology, alternate energy sources and cleaner production techniques were also being recommended to enhance overall sector competiveness, he maintained.
“SMEs are the most important segment of Pakistan’s economy contributing 40 percent to GDP, over 40 percent to exports and provide significant employment opportunities. There is a need to provide necessary support to overall SME Sector to achieve the policy goals as set out in Pakistan Vision 2025,” he observed.
