UNISAME Condemns New Tax on Cash Withdrawals, Calls for Repeal

Karachi: The Union of Small and Medium Enterprises (UNISAME) has voiced strong opposition to a newly imposed tax on cash withdrawals from bank deposits, labeling it an unjust and poorly conceived policy that breaches fundamental taxation principles.

In a statement, UNISAME President Zulfikar Thaver criticized the Federal Board of Revenue (FBR) for neglecting principles of equity and fairness in its decision. He argued that taxation should apply to profits, not savings or reserves, and highlighted that bank deposits already incur a 20% withholding tax on interest. “Taxing the same money again upon withdrawal amounts to blatant double taxation,” Thaver stated.

The union raised several key objections to the tax:

First, it highlighted the regressive and anti-business nature of the tax. SMEs, which often withdraw cash in bulk to pay suppliers and laborers, are disproportionately affected. Many businesses and services, including hospitals and emergency services, prefer cash transactions.

Second, UNISAME pointed out the disproportionate burden placed on SMEs and ordinary citizens. While large corporations and wealthy individuals typically use digital transactions, the tax targets micro-entrepreneurs and small traders who depend on cash.

Third, the union questioned the FBR’s lack of stakeholder consultation. Thaver expressed doubt about whether a proper cost-benefit analysis was conducted or if industry stakeholders were consulted before the tax’s implementation.

UNISAME has called for an immediate review of the tax, warning of its potential to stifle economic activity and exacerbate financial hardship for low-income groups. The union urged the FBR to focus on broadening the tax net and addressing tax evasion by elite taxpayers instead of targeting the struggling SME sector.