Smeda proposes measures for SMEs in Budget 2015-16

LAHORE: The Small and Medium Enterprises Development Authority (Smeda) has proposed an export credit guarantee insurance scheme, besides increasing the income tax exemption and decreasing the corporate tax for SMEs in the upcoming federal budget.
The budget proposal sent by the Smeda submitted to Ministry of Industries and Production, Ministry of Finance and Federal Board of Revenue, sought special attention for SMEs in the national budget FY 2015-16.
The Smeda has developed these proposals in consultation with SME stakeholders, trade associations and Chambers of Commerce and Industries.
Salient of the direct tax budget recommendations include increase in income tax exemption limit up to Rs600,000/-, increase in cash withdrawal limit up to Rs100,000 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 has also been recommended.
Furthermore, reduction in sales tax rate on raw material and other procedural measures have been proposed to ease the cost of doing business for SMEs. To enhance SMEs integration in global value chain, various measures have been recommended to reduce tariff barriers.
In order to enhance SMEs share in total exports, an export credit guarantee insurance scheme has been proposed to protect exporters from external risk. Incentives for SMEs to obtain quality certification and patent registration, access to modern technology, alternate energy sources and cleaner production techniques are also being recommended to enhance overall sector competiveness. To address the issue of SMEs access to finance, various development initiatives such as leasing, factoring, credit guarantees should be encouraged.
SMEs are the most important segment of Pakistan’s economy. They contribute 40 percent to GDP, over 40 percent to exports and provide significant employment opportunities. There is a need to provide necessary support to SME sector to achieve the policy goals set out for Pakistan Vision 2025.