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Tag: SMEs

  • Mastercard partners with MCB Bank to empower SMEs in Pakistan

    Mastercard partners with MCB Bank to empower SMEs in Pakistan

    LAHORE: Mastercard and MCB Bank have signed an agreement to boost financial inclusion and empower Small and Medium Enterprises (SMEs) in Pakistan.

    The agreement was signed between J.K. Khalil, Cluster General Manager, MENA East, Mastercard and Shoaib Mumtaz, President & CEO, MCB Bank at MCB House, Lahore. Senior members from both organizations were also present at the ceremony.

    READ MORE: Mastercard, Bank Alfalah enter strategic partnership

    Simplify Commerce, powered by Mastercard Payment Gateway Services, is specifically designed to be easy to use, making it possible for merchants with only a minimal amount of digital experience to access a convenient and secure acceptance solution and receive payments within a matter of minutes.

    The partnership allows businesses to sign up for an innovative and cost-effective application that allows them to quickly embrace electronic acceptance. Extremely easy to set up, the technology enables SMEs with a suite of powerful payments and business management features that help simplify backend processes, helping MCB partner merchants to focus on core business functions as they enter and thrive in the digital marketplace.

    The solution benefits small businesses who want to build their own webstores without coding knowledge, use advance payment options such as e-invoicing, integrate with social media, take informed business decision using the powerful reporting module or build payments into existing websites with hosted payment or shopping cart payment plug-ins.

    READ MORE: Bank Alfalah posts 45% growth in profit after tax

    J. K. Khalil, Cluster General Manager, MENA East, Mastercard, said: “Small businesses play a vital role in uplifting communities and building inclusive economies. As SMEs navigate a changing digital world, it is crucial to have access to the right insights, technologies, and solutions to grow and scale. Together with MCB Bank, we are supporting Pakistan’s SME community and providing these businesses with the digital tools and resources to help them thrive.”

    Shoaib Mumtaz, President & CEO at MCB Bank, said: “Our alliance with Mastercard will provide small and medium enterprises a powerful suite of business management tools to better manage the financial and administrative aspects of their enterprises. We are confident that Simplify Commerce will greatly streamline backend processes, providing MCB partner merchants the freedom to focus on what’s important, growing their businesses in the ecommerce arena. This partnership will go a long way towards empowering entrepreneurs and fostering financial inclusion, both critical drivers of sustainable economic growth.”

    READ MORE: Meezan Bank announces direct payment integration with VISA Card

    According to the Pakistan Bureau of Statistics, in 2019, SMEs constitute nearly 90% of entirely private businesses and employ almost 78% of the non-agricultural labor force in Pakistan reflecting the huge potential for digitalization of these businesses to boost the nation’s economy.

    The announcement builds on Mastercard’s longstanding relationship with MCB Bank and its ongoing support to SMEs in Pakistan and across the MENA region. Globally, Mastercard has pledged to connect one billion people and 50 million micro, medium and small businesses to the digital economy by 2025 – with a direct focus on 25 million women entrepreneurs.

  • Five-year old enterprise to be treated as start-up

    Five-year old enterprise to be treated as start-up

    KARACHI: The State Bank of Pakistan (SBP) has revised its regulatory framework concerning small and medium enterprises (SMEs), including a significant redefinition of what constitutes a start-up.

    (more…)
  • SBP launches challenge fund for SMEs

    SBP launches challenge fund for SMEs

    KARACHI: The State Bank of Pakistan (SBP) on Monday March 21, 2022, launched challenge fund for Small and Medium Enterprises (SMEs) to support innovative solutions for SME banking in the country.

    The central bank through a circular issued procedure for the challenge fund for SMEs (CFS).

    This fund in form of grant will facilitate banks in developing innovative technological solutions to cater the banking needs of SME sector.

    READ MORE: Meezan Bank starts Islamic financing scheme for SMEs

    This will also enable to increase the access and usage of digital financial services by SME sector.

    The scope of CFS will focus, however, it will not be limited to the following areas:

    i. Developing SME banking solutions

    ii. Developing digital payment solutions for SMEs

    iii. Developing E-Commerce / market place

    iv. Digitizing loans application and credit management

    READ MORE: Computation of income tax on profit and gains for SMEs

    The SBP said that commercial banks (conventional & Islamic) are eligible to apply for grant under CFS. Banks can also apply in partnership with Non-banking financial Institutions (NBFIs), Fintechs, Electronic Money Institutions (EMI) and software houses. However, lead responsibility will rest with the applicant bank.

    The SBP said that grant size will be determined according to the financing requirements of the proposal under consideration. However, each grantee will contribute 15 per cent of the total cost. Depending upon the quality and innovations of proposal, the grant size can vary, however one bank will get only one grant. The duration of the projects to be implemented through CFS grant should not exceed 8 months.

    SBP invites interest of banks through Expression of interest (EOI) placed at Annexure A for availing grant under CFS to improve their SME financing portfolio. Banks proposals will be evaluated as per technical criteria developed by SBP.

    Banks are encouraged to apply as per EOI on prescribed format placed at Annexure-B to SBP latest by April 18, 2022.

  • SBP organizes SME exhibition in Multan

    SBP organizes SME exhibition in Multan

    KARACHI: State Bank of Pakistan (SBP) in collaboration with Multan Chamber of Commerce & Industry (MCCI) organized a two-day SME Exhibition on January 24-25, 2022.

    The event was attended by officials and members of chambers of industry & commerce, associations of traders and women entrepreneurs, and SMEs clusters of Multan, Khanewal, Vehari, D.G. Khan besides officials of SBP BSC and banks.

    Muhammad Usman Dar, Special Assistant to Prime Minister on Youth Affairs, speaking in the inaugural session of the Mela, highlighted the progress of Prime Minister’s Kamyab Jawan Program especially designed for young entrepreneurs in the country.

    READ MORE: Mini-budget likely to push up inflation: SBP

    He praised the personal commitment of Governor SBP, Dr Reza Baqir, in expanding the access to credit at grass root levels including small businesses, women entrepreneurs, and people dreaming to own their home through new credit schemes such as SME Asaan finance (SAAF), Mera Pakistan Mera Ghar (MPMG) and SBP Refinance Scheme for Women Entrepreneurs.

    Muhammad Ashraf Khan, Managing Director SBP Banking Services Corporation (SBP BSC) inaugurated the event and while giving his keynote address said that SBP is making all its efforts to enhance collaboration with the industry and chambers across the country to spread awareness of its credit schemes to boost their utilization.

    Besides, SBP BSC in partnership with Industry Chambers and Women Associations is working under a new mechanism to identify potential businesses and their employees to apply in the banks for loans under concessional credit schemes for SMEs and housing.

    READ MORE: Tax imposed to protect domestic entertainment industry

    Highlighting the objectives of the SME Mela, he stated that this would bring banks and business community under one roof, providing an opportunity to micro, small, and medium enterprises to seek guidance from concerned officials of SBP and commercial banks about concessionary refinance schemes.

    He encouraged those SMEs to apply under SBP’s SAAF that have strong business viability but do not have collateral to offer.

    At this occasion, Khawaja Muhammad Hussain, President MCCI thanked both Special Assistant to Prime Minister and MD SBP BSC, assuring full support of all regional chambers for creating awareness about GoP and SBP concessional financing schemes among the business community of Multan and surrounding areas.

    READ MORE: FBR slaps sales tax at 17% on supply of food stuff

    On day one of the Mela, participants were briefed about the key features of SAAF and PM Kamyab Jawan Youth Entrepreneurship Scheme. Under SAAF Scheme, collateral free financing of up to Rs10 million is available through eight participating banks.

    Similarly, under Kamyab Jawan Scheme, concessional loans of up to Rs25 million are available at end user rate of 3 per cent to 5 per cent. On the second day of Mela, participants were apprised about key features of SBP’s financing scheme for renewable energy and Mera Pakistan Mera Ghar (MPMG) Scheme.

    Over 600 businesses and firms attended the Mela and visited the banks’ stalls to seek knowledge of SBP’s financing schemes and banks’ loan products. Notably, 264 participants registered themselves at various bank’s stalls to express interest in concessional schemes, including 105 SMEs and women entrepreneurs who applied on the spot for financing under different SBP’s schemes and Kamyab Jawan Program. During the event, MD SBP BSC also distributed cheques among the borrowers of HBL, Bank of Punjab and Bank Alfalah under SBP’s SAAF.

    READ MORE; FBR enhances tax rates on motor vehicle registration

  • Meezan Bank starts Islamic financing scheme for SMEs

    Meezan Bank starts Islamic financing scheme for SMEs

    KARACHI: Meezan Bank has become the first bank in the country to launch Islamic financing scheme for Small and Medium Enterprises (I-SAAF), a statement said on Wednesday.

    The launching ceremony was held at Multan Chamber of Commerce and was attended by Dr. Reza Baqir – Governor, State Bank of Pakistan (SBP), other senior officials of SBP, Ariful Islam – Deputy CEO, Meezan Bank, Khawaja Muhammad Hussain – President Multan Chamber of Commerce – and members of the business community.

    READ MORE: Meezan Bank to provide eBiz+ services to G&T Group

    Under the Scheme, Meezan Bank will extend Shariah-compliant short-term and long-term facilities of up to Rs10 million to eligible customers, at a subsidized rate of 9 percent per annum.

    The Scheme was introduced by SBP, and eight participating banks were selected through a transparent bidding process.

    Meezan Bank was one of the successful bidders, with a sizeable share in the overall program, and the only Islamic bank offering its Shariah-compliant alternate, in-line with its Vision of establishing ‘Islamic banking as banking of first choice…’

    READ MORE: Meezan Bank, Retailo sign agreement to finance youth

     I-SAAF will allow access to finance to SMEs that despite being credit-worthy are unable to avail financing due to collateral or other requirements.

    While distributing cheques to I-SAAF customers, Mr. Ariful Islam – Deputy CEO, Meezan Bank reaffirmed the bank’s commitment to invest in human resource and technology to ensure success of the Scheme and enable a swift and hassle-free application process for its customers. Ariful Islam also presented a memento to Dr. Reza Baqir for gracing the event with his presence.

    READ MORE: SBP directs banks to accept bearer prize bonds

  • Customs introduces new module in WeBOC for SMEs

    Customs introduces new module in WeBOC for SMEs

    The Federal Board of Revenue (FBR) has unveiled a new module within the WeBOC (Web-Based One Customs) system. This online Customs clearance system is designed to specifically cater to the needs of small and medium enterprises (SMEs), aiming to streamline their operations in the realm of international trade.

    (more…)
  • FPCCI proposes enhancing SME turnover to Rs1.5 billion

    FPCCI proposes enhancing SME turnover to Rs1.5 billion

    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.

    FPCCI, IBA to collaborate for budget proposals, research
  • SBP selects eight banks for collateral-free loan scheme

    SBP selects eight banks for collateral-free loan scheme

    KARACHI: State Bank of Pakistan (SBP) has selected eight banks for lending collateral-free loan to Small and Medium Enterprises (SMEs), a statement said on Wednesday.

    Governor State Bank of Pakistan, Dr. Reza Baqir announced that banks have shown overwhelming response to an innovative financing scheme for collateral free lending to SMEs introduced by the State Bank and supported by the Government of Pakistan.

    This is the first time a comprehensive collateral free SME lending scheme has been introduced by SBP in the country.

    Out of 20 banks that competed for participating in this scheme, 8 banks under four categories have been selected on the basis of highest amount of finance and highest number of SME clients to be served.

    These categories include large banks, mid-sized banks, small banks, and banks in collaboration with fintechs.

    The winning banks are Habib Bank Ltd, United Bank Ltd, Allied Bank Ltd, Meezan Bank Ltd, Bank Alfalah Ltd, The Bank of Punjab, JS Bank Ltd and The Bank of Khyber. These banks have been selected through a transparent bidding process based on prescribed criteria.

    While appreciating banks’ enthusiastic response, Dr. Reza Baqir, Governor State Bank emphasized early roll out of the scheme by banks.

    He also underscored the importance of extensive awareness and marketing of the scheme for the SMEs to fully utilize its benefits.

    Access to finance for SMEs remains low in Pakistan due to a number of factors including lack of collateral and perceived high risk due to non-availability of track-record.

    To address these issues, SBP adopted an innovative approach by designing SME Assan Finance, commonly known as SAAF which refers to the collateral free nature of finance. SAAF has been developed after thorough consultation with stakeholders.

    To implement this scheme, the SBP decided that rather than advising all banks to offer this product, only willing banks will be encouraged to be part of this initiative and develop their expertise through a transparent process.

    SAAF was launched in August 2021 and bids were solicited from the interested banks. Under SAAF, SBP will provide refinance to the banks at 1 per cent per annum (p.a.) for onward lending to SMEs at a maximum end-user rate of up to 9 per cent p.a.

    The end user rate under SAAF would be attractive for SMEs when compared with usual cost of financing for them from informal sources which can run 25 per cent – 50 per cent p.a.

    The margin available to banks will help them to make an upfront investment in human resources, technology and processes to cater to promote SME finance.

    This incentive has been provided to banks for the first three years of this scheme after which it is expected to become self-sustaining.

    Additionally, under SAAF, risk coverage of up to 60 percent is being provided by Government of Pakistan. Under the SAAF scheme, SMEs can avail collateral free financing of up to Rs 10 million to meet their long-term capital expenditure and short-term working capital needs.

    Governor Baqir also emphasized that a Shariah compliant version of SAAF is also available.

    SBP has allocated refinance limits to eight winning banks for three years. Currently, these banks are finalizing their roll out plans for successful implementation of the scheme.

    It is expected that selected banks will shortly roll out their SAAF programs through public announcements and marketing campaigns so that SME borrowers can approach any of these eight banks to request collateral free financing.

    SBP rejects reports of financial losses in cyber attack
  • Finance Act, 2021: New tax regime for small, medium enterprises introduced

    Finance Act, 2021: New tax regime for small, medium enterprises introduced

    ISLAMABAD: A new tax regime has been introduced for small and medium enterprises offering options of reduced rate of income tax and final tax.

    Through Finance Act, 2021 a small and medium enterprise has been defined as a person who is engaged in manufacturing as defined in clause (iv) of sub-section (7) of section 153 of the Income Tax Ordinance, 2001 and his business turnover in a tax year does not exceed two hundred and fifty million rupees:

    Provided that if annual business turnover of a small and medium enterprise exceeds two hundred and fifty million rupees, it shall not qualify as small and medium enterprise in the tax year in which annual turnover exceeds that turnover or any subsequent tax year.

    RULES FOR COMPUTATION OF PROFIT AND GAINS FOR SMALL AND MEDIUM ENTERPRISES

    1. Application.- These rules shall apply to small and medium enterprises as defined in Clause (59A) of Section 2 of the Ordinance.

    2. Registration.- Small and medium enterprise shall be required to register with FBR on its Iris web portal or Small and Medium Enterprises Development Authority on its SME registration portal (SMERP).

    3. Categories and tax rates.- There shall be following two categories of small and medium enterprises and tax on their taxable income shall be computed at the tax rates given in the table below, namely:-

    Sr. No.CategoryTurnoverRates
    (1)(2)(3)(4)
    1.Category-1Where annual business turnover does not exceed Rupees 100 million7.5% of taxable income
    2.Category-2Where annual turnover exceeds Rupees 100 Million but does not exceed Rupees 250 Million15% of taxable income

    4. Option for Final Tax Regime.-

    (1) The small and medium enterprises may opt for taxation under final tax regime at the rates given in the table below:

    Sr. No.CategoryTurnoverRates
    (1)(2)(3)(4)
    1.Category-1Where annual business turnover does not exceed Rupees 100 million0.25% of gross turnover
    2.Category-2Where annual business turnover exceeds Rupees 100 million but does not exceed Rupees 250 million0.5% of gross turnover

    (2) Option under sub-rule (1) of this rule shall be exercised at the time of filing of return of income and option once exercised shall be irrevocable for three tax years.

    (3) The provisions of section 177 and 214C shall not apply to SME who opts for taxation under sub-rule (1) of this rule.

    5. Audit.-

    (1) SMEs who opt for taxation under normal law under rule 3 may be selected for tax audit through risk based parametric computer ballot under section 214C of the Ordinance if its tax to turnover ratio is below tax rates given in rule 4 of these rules.

    (2) The cases selected under sub-rule (1) of this rule shall not exceed 5% of the total population of SMEs whose tax to turnover ratio is below tax rates given in rule 4 of these rules.

    6. Exports.- The export proceeds of SMEs shall be subject to tax as per rates prescribed in Rule (4) under final tax regime.‖;

    7. Exclusion from Minimum Tax on Turnover.- The provisions of section 113 of the Ordinance shall not apply to SMEs.

    8. Tax on Supply of Goods.-The tax deductible under clause (a) of sub-section (1) of section 153 shall not be minimum tax where payments are received on sale or supply of goods by SMEs.

    9. Provisions of Ordinance to apply.- The other provisions of the Ordinance shall apply mutatis mutandis to the SMEs.

  • Rules for computation of profit and gains for SMEs

    Rules for computation of profit and gains for SMEs

    ISLAMABAD: Rules have been issued for computation of profit and gains of Small and Medium enterprises (SMEs). The SMEs shall be required to register with the Federal Board of Revenue (FBR) on its IRIS web portal.

    The SMEs are also given option to register with Small and Medium Enterprises Development Authority on its SME registration portal (SMERP).

    There shall be following two categories of small and medium enterprises and tax on their taxable income shall be computed at the tax rates given in the table below:

    Category – 1: Where annual business turnover does not exceed Rs100 million, the tax rate shall be 7.5 per cent of taxable income

    Category – 2: Where annual turnover exceeds Rs100 million but does not exceed Rs250 million, the tax rate shall be 15 per cent of taxable income

    The Finance Bill 2021 proposed definition of Small and Medium enterprises as:

    —a person who is engaged in manufacturing as defined in clause (iv) of sub-section (7) of section 153 of the Ordinance; and

    —his business turnover in a tax year does not exceed two hundred and fifty million rupees.

    Subject to a condition that if annual business turnover of a small and medium enterprise exceeds two hundred and fifty million rupees, it shall not qualify as small and medium enterprise in the tax year in which annual turnover exceeds that turnover or any subsequent tax year.

    The Bill proposes a new section read with Fourteenth Schedule which shall deal with the computation and payment of tax for small and medium enterprises (SMEs) for tax year 2021 and onward as per the procedure laid down.

    Option for final tax regime

    —The small and medium enterprises may opt for taxation under final tax regime at the rates given in the table below

    Category – 1: Where annual business turnover does not exceed Rs100 million, the rate of tax shall be 0.25 per cent of gross turnover

    Category – 2: Where annual business turnover exceeds Rs100 million but does not exceed Rs250 million

    —Option under this rule shall be exercised at the time of filing of return of income and option once exercised shall be irrevocable for three tax years. The provisions of section 177 and 214C shall not apply to SME who opts for taxation under Final Tax Regime.

    SMEs that opt for taxation under normal law may be selected for tax audit through risk based parametric computer ballot under section 214C of the Ordinance if its tax to turnover ratio is below tax rates specified in these rules.

    The cases selected under audit of this rule shall not exceed 5 per cent of the total population of SMEs whose tax to turnover ratio is below tax rates given in these rules.