SMEDA suggests soft tax regime for SMEs

LAHORE: Small and Medium Enterprises Development Authority (SMEDA) has urged the government to simplify tax procedures/ documentation and reduce number as well as frequency of taxes for small businesses in the next budget, an official said on Wednesday.

“The authority has recommended that corporate tax for SMEs (small and medium enterprises) should also be brought down from 25 percent to 20 percent,” Sher Ayub, chief executive officer SMEDA, said highlighting the authority’s key budget proposals for the fiscal to come.

A SMEDA statement said after a round of consultation with the stakeholders across the country, the authority submitted recommendations for federal budget 2018-19 to the ministry of industries and production, ministry of finance and Federal Board of Revenue to seek special attention for SMEs in the budget this month. Ayub said the authority, in its policy paper, has also suggested the establishment of a one-stop-shop to deal with tax/business related legal, regulatory documentation, and compliance issues of the SMEs.

“The regulator also sought sales tax exemption on import of machinery and raw material as well as tariff rates and other procedural measures to enhance the productivity of SMEs,” the SMEDA chief said.

He said SMEDA has also advised for the development of export-clusters for technology intensive products of engineering, chemicals, value-added textile and pharmaceutical sector to increase SMEs share in total exports.

“The business community has called for establishment of industrial estates and export processing zones exclusively for SMEs in each province to provide state of the art facilitation,” Ayub said.

The CEO added that modernisation of Peshawar dryport, establishment of expo centers in Quetta and Peshawar and quality certification and testing labs for promoting regional and international trade have also been recommended.

Ayub further said in order to increase SMEs access to credit the SMEDA has recommended the government to introduce financial schemes for new startups and women entrepreneurs.

“Relaxation in markup rates and loans on soft conditions are a part of this recommendation,” he said adding equity financing for SMEs by commercial banks, venture capital firms and angel investment programs have also been proposed to the concerned departments.

Ayub further said in view of the significance of SME sector to the economy, the SMEDA has exclusively urged the government to provide necessary support to the sector by ensuring allocation of resources and incentives in the federal budget 2018-19 to create a business-friendly environment for the SMEs.

The SMEDA official said the proposals were developed in consultation with SME stakeholders, trade associations and chambers of commerce and industries.

“To solicit inputs from the business community, nationwide budget consultative sessions were held in seven cities including Lahore, Karachi, Quetta, Peshawar, Gujranwala, Rawalpindi, and Sialkot,” he said.