Pkrevenue.com

Tag: SMEs

This tag provides news articles on SMEs. Pakistan Revenue committed to provide updates on the SMEs as soon as those appear. SEMs is the major economic sector of the country.

  • 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.

  • FBR simplifies tax rules to facilitate SMEs

    FBR simplifies tax rules to facilitate SMEs

    ISLAMABAD: Federal Board of Revenue (FBR) on Friday issued simplified tax rules for facilitation of small and medium enterprises (SMEs).

    FBR has changed the rules to facilitate Small and Medium Enterprises to enhance exports through Notification No. 1002(I)/2019 dated 06.09.2019 which has introduced amendments in original Notification 327(I)/2008 dated 28.03.2008.

    This is in line with the directives of the Prime Minister of Pakistan to simplify the tax laws and to automate the business processes to bring transparency in the system.

    In order to implement this vision, FBR under the leadership of Shabbar Zaidi, Chairman, has simplify this export scheme and provided new incentives for the business community.

    The Small and Medium Enterprise Units working under this scheme is the largest export promotion scheme presently being used by the export sector.

    Besides introducing amendments in the Export Oriented Units Scheme, the Federal Board of Revenue has also automated these processes in the computerized clearance system WeBOC. This will further reduce human interaction and create business friendly environment.

    According to the details, the retention period of plant, machinery and capital goods is reduced from 10 years to 5 years.

    This will help export industry to keep abreast of latest developments and trendsin the technology.

    If plant, machinery and capital goods are sold or otherwise disposed of before the expiration of five, then different slabs of duty and taxes are introduced whereas after five years disposal of such plant and machinery is allowed without payment of duty and taxes.

    Similarly, disposal mechanism of spares and replacement parts have been provided and now these parts are allowed to be disposed offafter three years.

    To address delays in processing, tiers of administration have been reduced. Now Regulatory Authority is created and the powers have been devolved to Additional Collectorfor grant, revalidate or amend EOU licenses.

    In the new scheme, if there are any problems, the businessman can approach Chief Collector of Customs for redressal of their grievances.

    In order to alleviate the burden of getting the analysis card issued from Input Output Coefficient Organization (IOCO) or Engineering Development Board (EDB) against each license, now if ratio in the analysis certificate is similar to the ratio determined in the previous year, then the Regulatory Authority will issue the license without seeking recommendations from IOCO/EDB.

    Moreover, the provision for issuance of the provisional analysis certificate has also been provided in the Export Oriented Unit Rules in case of delay caused by IOCO/EDB so that the processes of the Export Oriented Units may not get hurt.

  • SBP urges SMEs to avail refinance benefits

    SBP urges SMEs to avail refinance benefits

    KARACHI: State Bank of Pakistan (SBP) has urged Small and Medium Enterprises (SMEs) to avail refinance facilities as the central bank put in place number of refinance facilities both for purchase of plant & machinery for SMEs and working capital finance for special sectors.


    While speaking to SMEs, Syed Samar Hasnain, Executive Director, SBP at a meeting with manufacturers and exporters belonging to SME sectors and bankers based in Sialkot on Wednesday, he emphasized that banks have been instructed to inform SMEs about their facilities.

    At the same time, he also urged the SMEs to take a step ahead and approach nearby bank branches to know about SBP’s facilitates available for them.

    Hasnain stated: “In terms of numbers, most of the entities in your region are SMEs. If you want to graduate from indirect exporter to direct exporter, you can modernize and expand your plant and equipment by availing SBP’s refinance facilities for modernization.”

    He encouraged the SMEs to avail SBP’s refinance facility for renewable energy to overcome power problem. Adding further, he said that SMEs can also use SBP’s subsidized refinance facility for setting up silos, cold storage facility and warehouses. Mr. Hasnain assured the SMEs that SBPBSC- Sialkot office will be taking stock of the financing extended to SMEs and progress in this regard will also be monitored closely.

    In a presentation, salient features of SBP’s Policy for Promotion of SME Finance were explained. It highlighted the nine pillars of the policy, namely, i) Improving Regulatory Framework; ii) Upscaling through Microfinance Banks; iii) Risk Mitigation Strategy; iv) Simplified Procedure for SME Financing; v) Program Based Lending & Value Chain Financing; vi) Capacity Building & Awareness Creation; vii) Handholding of SMEs – Non Financial Advisory Service; viii) Leveraging Technology to promote SME Financing; and, ix) Simplifying Taxation Regime for SMEs.

    The meeting/awareness sessions were attended by representatives from associations including Pakistan Sports Goods Manufacturers & Exporters Association, Pakistan Gloves Manufacturers & Exporters Association, Leather Garments Manufacturers & Exporters Association, Pakistan Hosiery Manufacturers & Exporters Association and Pakistan Cutlery & Stainless Utensils Manufacturers and Exporters Association in Sialkot.

    Regional heads, SME heads and branch managers of all banks operating in the region also participated in these meetings. Chief Manger SBP Sialkot was also present on the occasion.