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Office Hours: 09:00am-6:00pm
Office Hours: 09:00am-6:00pm
Office Address
Office # 108-110, Eden Center
Client Name
Small & Medium Enterprises Development Authority, (SMEDA). Research Regulatory Insight & Advocacy Assistance, (RRI&A). Ministry of Industries & Production Government of Pakistan, (GoP) (A PSDP Funded Program)
Project Title
Research Study on Existing Income Tax Regime on Small & Medium Enterprises”
Description of the Project
As the NJHR Consultants, we executed this research study on behalf of our client to comprehensively assess the impact of the existing income tax regime on Small and Medium Enterprises. Through in-depth analysis, stakeholder engagement, and visual representations, our study aimed to provide a comprehensive understanding of the current landscape while offering insights and recommendations for enhancing the alignment of the income tax framework with the needs and growth aspirations of SMEs Our methodology was a participatory approach of Focus Group Discussions and Key Informant Interviews. This facilitated active engagement with a range of stakeholders, including representatives from the Federal Board of Revenue, Provincial Regulatory Authorities (Punjab, Sindh, Baluchistan, Khyber Pakhtunkhwa), Ministry of Finance, Ministry of Industries & Production, business leaders, and formal as well as informal SMEs. This interactive process ensured that the study reflected a comprehensive national perspective.
Scope of the Project
Scope of work includes:
1. Examine and analyze Income tax regime/structure applicable to SMEs, including, but not limited to, withholding tax, advance tax, minimum tax, etc., relevant to the SME sector of Pakistan. This should also include tax rates and incidence of income tax at various stages of business transactions, along with exclusions, deductions, exemptions, applicable laws and procedures, etc., for manufacturing, services, and trade. The same should also be reflected in a schematic diagram(s).
2.Analyze the impact of income tax on an enterprise’s cost of doing business (Company, Limited Liability Partnership, Sole Proprietorships, Partnerships, Association of Persons (AOP), Corporations, etc.).
3. Indicate and report on critical determinants of Income Tax evasion (including but not limited to informal sector SMEs) and tax compliance, such as high tax rates, complex procedures, high compliance cost, discretionary powers of tax officials, withholding tax, lack of awareness, etc. and analysis of how these determinants affect tax compliance and business growth of SMEs along with solutions to mitigate them.
4.For carrying out the assignment, a participatory approach (Focus Group Discussions, Key Informant Interviews, etc.) must be adopted, soliciting input from key stakeholders, i.e., public and private sector SMEs. The Bidder shall propose a suitable mechanism of interaction with stakeholders such as the Federal Board of Revenue, Provincial Regulatory Authorities (Punjab, Sindh, Baluchistan, and Khyber Pakhtunkhwa), Ministry of Finance, Ministry of Industries & Production, Business Leaders, SMEs (Formal and Informal), etc. to ensure national participation.
Task Performed
Main Task Performed:
1. Examined and analyzed Income tax regime/structure applicable to SMEs, including withholding tax, advance tax, minimum tax, etc., relevant to the SME sector of Pakistan. Also included tax rates, the incidence of income tax at various stages of business transactions, exclusions, reductions, exemptions, and applicable laws and procedures for manufacturing, services, and trade. The same is also provided in a schematic diagram(s).
2.Analyzed the impact of income tax on an enterprise’s cost of doing business (Company, Limited Liability Partnership, Sole Proprietorships, Partnerships, Association of Persons (AOP), Corporations, etc.).
3.Indicated and reported on key determinants of Income Tax evasion (including but not limited to informal sector SMEs) and tax compliance, such as high tax rates, complex procedures, high compliance cost, discretionary powers of tax officials, withholding tax, lack of awareness, etc. and provided analysis of how these determinants affect tax compliance and business growth of SMEs along with solutions to mitigate them.
4. Carried out the assignment, a participatory approach (Focus Group Discussions, Key Informant Interviews, etc.) adopted soliciting input from key stakeholders, i.e., both public and private sector SMEs.
5. Propose a suitable mechanism of interaction with stakeholders such as the Federal Board of Revenue, Provincial Regulatory Authorities (Punjab, Sindh, Baluchistan, and Khyber Pakhtunkhwa), Ministry of Finance, Ministry of Industries & Production, Business Leaders, SMEs (Formal and Informal), etc. to ensure national participation.
Geographical Spread
All over Pakistan