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 small-business enterprises in the upcoming federal budget.
Smeda has proposed budget recommendations for the financial year 2015-16 and passed it onto the Ministries of Industries and Production, Finance and Federal Board of Revenue.
Smeda Chief Executive Officer Muhammad Alamgir Chaudhry said the proposals had been developed in consultation with small-business enterprises stakeholders, trade associations and the Chambers of Commerce and Industries.
"Features of the direct tax budget recommendations include an increase in income tax exemption limit up to 600,000 rupees, cash withdrawal limit up to 100,000 rupees and reduction in corporate tax to 30 and 20 percent for small companies, a reduction in withholding tax on profit on deposit and rationalisation and incentives for import of machinery for the small-business enterprises sector has also been recommended," he said.
A reduction in the sales tax rate on raw material and other procedural measures has been proposed to ease the cost of doing business for small-business enterprises. To enhance small-business enterprises integration in global value chain, various measures have been recommended to reduce tariff barriers. In order to enhance small-business enterprises share in total exports, an export credit guarantee insurance scheme has been proposed to protect exporters from external risk, he added.
The small-business enterprises are the most important segment of Pakistan's economy, contributing 40 percent to the gross domestic product, over 40 percent to exports and provide significant employment opportunities.
"There is a need to provide necessary support to SME sector to achieve the goals as set in Pakistan Vision 2025," he added.
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