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Business leaders have called on the finance ministry to reduce corporate and source taxes in the upcoming budget for fiscal year 2023-24 (FY24) considering the ongoing global economic volatility.
Speaking at a virtual pre-budget discussion with Finance Minister AHM Mustafa Kamal on Monday, they also urged to create business opportunities for all entrepreneurs.
Representatives of various sectors said the global economy is currently unstable due to the ongoing Russia-Ukraine war, the impact of which has resulted in high inflation rate, supply chain disruption across the globe, including Bangladesh.
Besides, the forex reserves have declined to alarming levels, the export sector is failing to perform well, investment has reduced and foreign currency has become costlier.
To ease the situation, the government has taken a loan from the International Monetary Fund (IMF), which comes with some strict conditions that are not in favour of businesses, especially for the cottage, micro and small entrepreneurs, business leaders said at the meeting.
According to them, if the government complies with all the conditions of the IMF, especially the ones regarding foreign currency exchange rate and bank lending rate, business will become tougher for traders.
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan said, “IMF prescribed to withdraw interest cap. If the government implements that recommendation, taking loans will be difficult for the cottage, micro and small entrepreneurs.
“Besides, the local currency has depreciated from Tk 82 to Tk 107 against the USD. On top of it, arranging foreign currency has already become difficult for all. If the government sets a floating exchange rate on a market basis, small businesses will not be able to open letter of credits even if big businesses can.”
He also urged the minister to reduce source tax from 1 per cent to 0.5 per cent for the upcoming budget.
Business leaders also called on the minister to introduce investment-friendly policies to deal with the challenges after Bangladesh graduates from the status of least developed countries (LDCs).
They said after the LDC graduation in 2026, businesses will face difficulties due as they will no longer enjoy certain facilities in the global markets. That is why the country needs huge investment to make it competitive.
But many of the existing policies are not investment friendly.
Metropolitan Chamber of Commerce and Industry, Dhaka President Md Saiful Islam said at present, businesses that are not listed in the capital market and are not export oriented, are paying 27.5 per cent corporate tax.
“The rate is not realistic. The government should reduce corporate tax to attract investors, create business competitiveness,” he said.
