KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has proposed to increase the turnover of Small and Medium Enterprises (SMEs) to Rs1.5 billion from existing Rs250 million for treatment of income tax.
FPCCI President Mian Nasser Hyatt Maggo, while praising the government for launching the SME Policy, said the defined annual sales turnover of a meager Rs250 million does not reflect the current ground realities of Pakistan; as when that threshold was set, the exchange rate was around Rs60 for a dollar, which has now climbed to over Rs170.
Therefore, he has suggested, the new limit should be set at Rs1.5 billion for SMEs.
FPCCI Chief has reiterated his proposal for a simplified and streamlined taxation regime; including, easy-to-fill tax return forms; end to corruption; phased lowering of sales tax rates, etc. through alignment it to FPCCI’s proposal called Simplification of Taxation System in Pakistan sent to the Prime Minister of Pakistan back in February 2021.
The FPCCI chief hailed the concerted efforts of Makhdoom Khusro Bakhtiar, Federal Minister for Industries & Production, for launching long-overdue SME Policy of Pakistan.
The SME Policy has been in the making for many years now and the process unfortunately got deferred many times over, he added.
Maggo said that financing is the lifeline for SMEs and the SBP’s current SAAF Scheme has allowed a banking spread of 8 per cent to commercial banks; on top of 1 per cent refinancing rate of SBP; which makes it 9 per cent for the SMEs. That much cost of capital is unaffordable, unproductive and unfeasible. FPCCI has proposed an interest rate of 3 per cent for SMEs to make it viable for small businesses & entrepreneurs.
Mian Nasser Hyatt Maggo has demanded that the government should update the definitions of Micro, Small and Medium-sized organizations and make it MSMEs on the lines of current best practices internationally; for devising preferential treatment protocols based on peculiar ground realities of Pakistan. MSMEs are the engines of growth & employment generation, he added.
Addressing the glaring issues in labour-related provincial & federal levies on SMEs in Pakistan, Mian Nasser Hyatt Maggo has proposed that all the provincial and federal levies to be clubbed together to make a single levy to be charged either as a percentage of turnovers or on some other pertinent criteria for the sake of simplification; but, protecting the present collections for the purposes these departments have been created as well.
In order to keep demand-side variables in SMEs favour, President FPCCI has suggested that the government should keep their procurement from SMEs strong & steady; incorporating procurement for CPEC-related projects.