Karachi: The Union of Small and Medium Enterprises (UNISAME) has expressed concerns over the Federal Board of Revenue's (FBR) proposed tax increases in the upcoming 2025/26 budget. The FBR plans to raise the withholding tax on bank deposit profits from 15% to 17%, along with a similar increase in capital gains tax.

Zulfikar Thaver, President of UNISAME, voiced disappointment over these measures, highlighting the challenges they pose for taxpayers. With deposit profits already reduced, the additional tax burden could be tough to manage. The potential increase in withholding tax on dividends, currently at 25%, also raises alarms about the impact on citizens.

The SME community, represented by UNISAME, is particularly concerned about these policies. They are perplexed by the FBR's strategy, which includes plans to issue advance tax notices and recover funds directly from bank accounts. This approach, according to Thaver, could deter savings and investment.

UNISAME also noted the government's existing collection of Zakat and the potential introduction of a wealth tax, which is reportedly not approved by the International Monetary Fund (IMF). The organization argues that wealth tax is unnecessary if Zakat is already being paid, according to Shariah principles.

The SME exporters, who contribute significantly through value addition, are already burdened by heavy taxes from the previous budget. UNISAME has called on lawmakers to scrutinize the finance bill thoroughly before approval to avoid exacerbating the challenges faced by SMEs.