MCCI supports decision to slash corporate tax rate by 2.5%

The Metropolitan Chamber of Commerce and Industry (MCCI) has applauded the government for the proposal in the new budget to reduce the corporate tax rate by 2.5 per cent for unlisted companies and one-person companies.

Finance Minister Abul Hassan Mahmood Ali tabled a Tk 7,97,000 crore national budget for the financial year 2024-25 (FY25) in parliament on Thursday.

In the budget speech, Ali proposed that the 25 per cent corporate tax replacing the existing 27.5 per cent for non-listed companies.

In an initial reaction to the proposed budget, MCCI proposed decreasing this rate for other listed companies as well, according to a press release.

Considering the present economic landscape, the chamber mentioned that the National Board of Revenue (NBR) had increased the revenue collection goal by 11.63 per cent.

It said the world is witnessing a persistent surge in commodity prices and inflation. On the other hand, the government faces a formidable challenge in expanding the tax net and increasing the tax-GDP ratio, it added.

MCCI believes that ensuring an adequate supply of Electronic Fiscal Devices (EFDs) for VAT will speed up the overall VAT collection process.

Furthermore, it suggested the prompt automation of the entire VAT system and the sufficient availability of EFDs.

In the current context, the chamber observed that it is necessary to increase the VAT net and bring all eligible establishments under the VAT umbrella.

MCCI appreciated the proposed provision of 10 per cent instead of 20 per cent deposit of tax claimed in appeals before the Appellate Commissionerate and the Appellate Tribunal in light of Value Added Tax and Supplementary Duty Act, 2012 and Value Added Tax and Supplementary Duty Rules, 2016.

The chamber opined that the effective automation of the VAT system, specifically through the integration of the Integrated VAT Administration System (IVAS) and Application Programming Interface (API), will significantly improve its efficiency, said the press release.

This will help ensure more VAT collection and bring more establishments under VAT, it added.

MCCI praised the government for extending the tax exemption on Information Technology-Enabled Services (ITES) until June 30, 2027.

Based on the latest data, the annual domestic turnover in the ITES sector is estimated to be approximately $1.5 billion, with exports reaching around $1.9 billion.

The current investment in this sector stands at approximately $600 billion, it added.

MCCI, in alignment with climate change goals, welcomed the proposal to reduce tariffs on electric and hybrid vehicles.

MCCI expressed gratitude to all parties involved in the enactment of the new Customs Act, 2023, in Bangla language, as a measure to facilitate ease of doing business.

It added that the implementation of the Customs Act 2023 will improve trade conditions in Bangladesh's import-dependent economy.

MCCI believes that this Act has the potential to enhance the ease of doing business, ensure compliance with WTO obligations, and foster a favourable environment for businesses.

The MCCI acknowledges the National Budget Proposal's focus on "Cashless Bangladesh," "Digital Bank and Credit Scoring System," and "Digital Land Management" as pivotal elements for advancing towards a Smart Bangladesh, which, in turn, will advance automation.

MCCI says that under normal circumstances, budget implementation should be subject to periodic monitoring and evaluation. Considering the prevailing global economic crisis, it is crucial to assess budget implementation.

As a result, MCCI believes it is essential to undertake an interim evaluation of the budget every three months. If necessary, the budget can be revised and modified accordingly. Also, addressing issues that have consequences for both society and the economy might be necessary.