Karachi, The Union of Small and Medium Enterprises (UNISAME) has voiced its concern over the recent discontinuation of the Fixed Tax Regime (FTR) and the subsequent tripling of tax rates for exporters, a move they believe could severely harm the sector and the broader economy.
According to Union of Small and Medium Enterprises, The recent budget announcement has replaced the FTR with a new system that imposes a 29% tax on profits in addition to a 1% withholding tax on export proceeds. UNISAME President Zulfikar Thaver criticized the change, stating that it places an undue burden on SME exporters who are already struggling to stay competitive globally. Under the old FTR, exporters were charged a flat 1% withholding tax, regardless of the profitability of their transactions.
The shift in tax policy is expected to dramatically increase the costs for exporters, potentially leading to price increases for Pakistani goods abroad, which could make them unaffordable to foreign buyers and lead to a loss of market share. This is particularly troubling for a country like Pakistan, which relies heavily on exports and remittances to fund its imports of essential goods such as oil, medicine, and raw materials.
UNISAME members argue that the new tax measures will not only affect exporters but will also have downstream effects on SME farmers and producers who supply goods for export. The potential decline in export activity could mean less demand for their products, resulting in significant economic losses across the sector.
The council has appealed to the government to reconsider its decision and to restore the FTR, arguing that such measures are necessary to protect the interests of SME exporters and to ensure the stability of Pakistan’s economy.