Home ›› 05 Oct 2022 ›› Front

Abolish advance tax from next FY: ICAB

Staff Correspondent
05 Oct 2022 00:01:57 | Update: 05 Oct 2022 00:01:57
Abolish advance tax from next FY: ICAB

The Institute of Chartered Accountants of Bangladesh (ICAB) has urged the government to abolish advance tax from the next fiscal year, and recommended an integrated revenue system to the National Board of Revenue (NBR).

Addressing a webinar on “Changes introduced through Finance Act 2022, SROs & Orders,” held by the ICAB on Monday night, experts said the advance tax – introduced in FY20 – is refundable, but many businesses cannot get refunds as the procedure has too many conditions.

Humayun Kabir, chairman of Taxation & Corporate Laws Committee (TCLC) at ICAB and moderator of the event, said, “The advance tax collection should be on hold for the ongoing FY, and abolished in the next fiscal year.

“Advance tax is one of major barriers against export diversification efforts, because it can push the VAT imposed on a small entrepreneur up to 21 per cent.”

Kabir, also the CEO of Shinepukur, continued, “Such advance tax did not exist in the country. The unique vat system was introduced for balancing the sheet as VAT was earlier paid in advance.

“Later, while buying the product, the vat was adjusted using the current account system. As the current account system has been withdrawn, the VAT collection might fall for the time being. To balance out the transitional period, the government introduced advance tax.”

Kabir further said, “We, the business community, thought that this tax might be used for the current fiscal year only. But that did not happen.”

Dr Abdul Mannan Shikder, member (Customs Audit, Modernization and International Trade) of NBR, said, “The government has gradually reduced the quantity of advance vat from 5 per cent to 3 per cent.

“The government is providing many facilities through rules and regulations. Maybe one day if they find that advance tax is not needed, they will withdraw it.”

NBR members say the tax-GDP ratio of Bangladesh is not as high as the data shows, because the government is providing big exemptions on different cases.

Shikder said the new Customs Act 2020 is at the vetting stage, and once it is completed, it would be sent to the parliament.

Md Farid Uddin, former member (Customs and VAT department) of NBR, said, “Although online tax payment has been in discussion for many years, in reality, the progress is minimal. It should be more system friendly.

“But there is no inter-departmental connectivity for proper coordination among the three departments. The government investment for NBR development is among the lowest. The government should initiate their journey towards an integrated tax management system.”

Former NBR member Ranjan Kumar Bhowmik pointed out several inconsistencies and misinterpretations in the latest circulars issued by the tax department, adding that due to these misinterpretations, soon after the budget was announced, the stock market was affected.

Mohammad Jahid Hasan, member (Tax Information management and Services) said, “In the first three months of this FY, around 330,000 taxpayers paid their taxes. It was around 100,000 last year.

“We are optimistic that a fully automated NBR would be possible within the next two to three years.”

Snehasish Barua and MBM Lutful Hadee presented the keynote papers during the programme. 

Snehasish Barua said, “The government has reduced the tax rate, but due to the conditions imposed for availing this reduction, no one will be able to get this facility.”

MBM Lutful Hadee discussed VAT, supplementary duty and the customs act at the event. While discussing decreasing adjustment after taking full rebate, he said it is not acceptable to allow rebate based on payment.

ICAB President Shahadat Hossain presided over the programme, while Planning Minister MA Manna attended as the chief guest.

×