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Proposals/Recommendations for Federal Budget 2021-22

Small and Medium Enterprises (SME) Sector is a dynamic sector of Pakistan’s economy. More than 90% of enterprises in Pakistan are SMEs and their total number is estimated to be 5.2 million. Importance of the sector can be assessed from the fact that, SMEs contribute an estimated 40% to Pakistan’s GDP and 25% to exports. In view of the importance of SME sector to the national economy, there is a need to support small and medium sized businesses by providing fiscal incentives in the area of taxation, export promotion, technical up-gradation, marketing, financial and human resource training & development, etc. to overcome size and scale related impediments. Furthermore, in order to promote formalization of businesses, registration procedures may be simplified and tax incentive may be provided. SMEs have been burdened with indirect taxes more particularly those who are regularly filing their income tax returns. Instead of putting additional burden on existing taxpayers, there is a need to bring more people into the tax net. Support from the Government has become critical to mitigate impact of COVID-19 on SMEs productivity, employment and exports. Attached are a set of recommendations developed in consultation with stakeholders across Pakistan, for consideration for inclusion in the Federal Budget 2021-2022