FBATI seeks separate tax regime for SMEs

KARACHI: The Federal B Area Association of Trade and Industry (FBATI) has urged the government to introduce a dedicated tax framework and a targeted support package for small and medium enterprises in the upcoming federal budget, saying such steps are needed to strengthen the sector’s performance.

In budget proposals submitted to the finance ministry, FBATI President Sheikh Tehseen called for a separate taxation system for SMEs and large industrial units. The association said tax treatment for SMEs should be based on reasonable profit and turnover thresholds, while bigger enterprises should fall under a different structure.

Support package and financing proposals

According to the proposals, SMEs should be given a special export support package, along with freight subsidies and financial assistance to participate in international exhibitions. The association said these measures were urgently required to help improve the performance of smaller businesses.

FBATI also proposed easier access to financing at low markup to help SMEs expand quickly and raise production capacity. It said interest-free or low-markup loans should be made available for machinery modernisation, automation, digitalisation and the purchase of energy-efficient equipment.

Energy and utility concerns

The association asked for a reduction in electricity tariffs for industry, with a particular focus on SMEs. It also called for major cuts in fixed charges, peak-hour charges and other surcharges that add to industrial costs.

FBATI further said uninterrupted electricity and gas supplies should be ensured so that production expenses do not rise and export or industrial orders can be completed on time.

Tax procedures and industrial infrastructure

Among other recommendations, the association said SMEs should either be exempted from complicated withholding tax requirements or provided with significantly simplified procedures. It also stressed the need for timely payment of sales tax refunds and other government dues to reduce pressure on working capital.

The proposals also sought dedicated funding for infrastructure in industrial areas, including roads, drainage, security arrangements and utility services. In addition, FBATI recommended special tax incentives for newly established SMEs and startup manufacturing units for their first three to five years, saying this could support employment and investment.