Four investment promotion bodies for slashing corporation tax to 25%

Four business promoting authorities have urged the National Board of Revenue to set the corporate tax rate at 25 per cent in the upcoming national budget for the Fiscal Year 2022-23. 

They are – Bangladesh Economic Zones Authority (BEZA), Bangladesh Export Processing Zones Authority (BEPZA), Bangladesh Hi-Tech Park Authority (BHTPA) and Bangladesh Investment Development Authority (BIDA).

Representatives from these authorities made the proposal during a pre-budget meeting with NBR Chairman Abu Hena Md Rahmatul Muneem at his office in the capital on Thursday.

BEZA

Presenting a budget proposal at the event, BEZA Deputy Secretary Mohammad Rezaul Hoque said, “The current corporate tax rate is 30 per cent in Bangladesh, and it should be set at 25 per cent.

“The NBR has reduced the corporate tax rate by 5 per cent, dropping it from 35 to 30 per cent in the last two years. We appreciate the measure, but many investors have requested us to reduce this rate further to ensure parity with our neighbouring countries.”

Neighbouring country India recently dropped the corporate tax rate from 22-30 per cent to 15-25 per cent. The corporate tax rate is 20 per cent in Vietnam and Thailand, and 25 per cent in China.

BEZA proposed to increase tax waiver for turnover of Small and Medium Enterprises (SMEs) up to Tk 3 crore from the existing 50 lakh, as this sector has been severely impacted by the Covid-19 pandemic.

Rezaul further said, “SMEs contribute 25 per cent of Bangladesh's GDP, which is 40 per cent for Vietnam, 52 per cent for Sri Lanka and 58 per cent for Cambodia. But the SME sector does not get facilities that the big industries do in this country.

“The SME sector will grow further and will be able to provide more employment opportunities if we can provide this sector with more facilities. Besides, the taxpaying process should be easier.”

Moreover, the industries under BEPZA are currently getting duty free import facilities in “Other goods” category, and BEZA proposed the same facility for its 100 per cent export-oriented industries.  

BEPZA

Executive Director of BEPZA Md Khorshid Alam presented a good number of proposals, urging a solution for HS code issues centring machinery and imported parts, and ensuring duty free facility for items essential for manufacturing firefighting, safety and security equipment.

He also spoke in favour of resolving issues regarding imports of foodstuff for foreign employees not available in Bangladesh.

BIDA

Director-General of BIDA Shah Mohammad Mahboob said, “Corporate, advance and tax at source in total reaches as high as 40-45 per cent in Bangladesh. But the global average for corporate taxes is around 21-24 per cent.

“For example, it is 24 per cent in Malaysia and 25 per cent in Indonesia. So, the tax rates should be reduced in Bangladesh.”

He added that the NBR should bring different international platforms and social media companies such as Amazon, Facebook and Google under the corporate tax net.

BIDA further recommended withdrawing the 25 per cent customs duty on “spare parts” for imported capital machineries, if imported separately.

BHTPA

Director (joint secretary) of Bangladesh Hi-Tech Park Authority (BHTPA) ANM Safiqul Islam said, “SRO is needed for ATM machinery, CC cameras, computers, IOT devices and set-top boxes for Hi-Tech parks.

Urging the NBR to withdraw SRO for several products, he added, “We propose the withdrawal of VAT and tax at source on different building materials and capital machinery parts produced locally for the development of our parks.”

BUILD

Presenting proposals at the meeting, Business Initiative Leading Development (BUILD)’s Chief Executive Officer (CEO) Ferdaus Ara Begum said, “The government has allocated a fund of Tk50 crore for facilitating research and development.

“Private research institutions, universities and others should be included as recipients of the fund.”

She also laid emphasis on the implementation of VAT automation modules and setting up interlinks.

NBR Chairman Abu Hena Md Rahmatul Muneem said, “We have reduced corporate taxes for different organisations and many are also getting exemptions for a long time. I have noted down your proposals and will consider those.

Calling upon the private sectors to carry out more research development, he said, “We want more involvement of the private sector in fields of research. If the government funds every research, the private sector’s participation in these fields will decrease further.”