In a bid to revitalize the small and medium enterprises (SMEs) sector and unlock its potential contribution to the economy, Finance Minister Ishaq Dar has announced a series of measures during his budget speech.
Recognizing the significance of SMEs as key drivers of economic growth, the government has taken decisive steps to foster their development and provide them with the necessary support.
One of the most significant announcements made by Minister Dar is the reduction of the concessional tax rate from 39% to an enticing 20%. This tax relief measure is set to remain in effect until June 30, 2025.
Moreover, the Assan Finance Scheme, designed to facilitate SMEs in securing much-needed funds, is set to be reintroduced.
Alongside this, the government has proposed the establishment of a dedicated Credit Rating Agency, aimed at providing valuable credit information and assistance to SMEs.
To further bolster the growth of SMEs, the government has expanded the SMEs tax incentives system by raising the turnover threshold from Rs250 million to Rs800 million.
This extension aims to attract more SMEs to avail themselves of the tax benefits, providing them with a conducive environment to flourish.
In a remarkable show of commitment towards supporting small businesses, an allocation of Rs10 billion has been earmarked in the current fiscal year to provide subsidized loans to small enterprises through the Prime Minister’s Youth Loan Program.
Furthermore, the State Bank of Pakistan has launched a refinancing scheme for SME loans, offering a significantly reduced markup rate of only 6%.
To address the apprehension faced by banks in extending such loans due to a lack of credit history for SMEs, the government has decided to assume up to 20% of the risk associated with new loans in this regard.
The much-anticipated relaunch of the SME Finance Scheme will provide SMEs with a renewed opportunity to access the necessary financial resources to expand their operations and contribute to economic growth.
Additionally, the establishment of a dedicated Credit Rating Agency tailored for SMEs will enable businesses to enhance their credibility and access financing on favorable terms.
