Bangladesh Investment Development Authority (BIDA) has urged the National Board of Revenue (NBR) to reduce source tax to 5-10 per cent from existing 20 per cent for non-resident Bangladeshis in the next budget for fiscal year 2023-24 aimed at easing the tax burden for them.
BIDA made the call at a pre-budget meeting organised by the revenue board on Sunday at the NBR office in the capital’s Agargaon area.
It also proposed slashing advance tax on raw materials and spare parts to zero per cent at the rate of 1 per cent every year and fixing advance tax on others at 3 per cent.
On the other hand, Bangladesh Export Processing Zones Authority (BEPZA) at the meeting urged the revenue board to ensure duty-free facility for importing capital machinery and include their HS codes in the updated statutory regulatory orders (SROs) for those having its approval for import.
BIDA said that source tax is considered as minimum taxation of the companies. As a result, the companies pay more than actual tax, but they do not get refund.
The revenue board should make the transfer pricing cell effective to know the actual fee at global standard, the authority suggested, calling for fixing the approval ceiling for expending royalty and technological services at 6 per cent of the turnover, disclosed in the financial statement, in consistent with FOREX and BIDA.
Besides, it urged the board to deem the approval expenses wholly, taking into consideration the actual business expenses of royalty, technical service fee and technical assistant fee.
BIDA suggested integrating ASYCUDA, VAT online system and income tax system so that the revenue board can crosscheck the imported data in the customs system, and import relevant information in VAT and income tax returns.
BIDA said they will assist the revenue board in carrying out research to fix maximum approval expenses for promotion in different industries and sectors.
The NBR should subscribe the database of goods so that it can know their updated prices in the international market. Production is now disrupted in the export processing zones as the investors don’t release their machinery brought in with duty-free facilities.
However, BEPZA called for updating relevant SROs in a bid to expand export-import trade with easing the business activities and sought such facility for building materials like structural and stainless nut of pre-fabricated buildings and so on.
Apart from tax rebate for the industries investing in EPZs and special tax waiver for diversified and non-traditional products, it also sought such facility for solar power set import in a bid to reduce pressure on diesel, and electricity amidst the crisis and sustain in the competitive world with undisrupted production process.
Terming the income tax management on source tax ‘anti-revenue biased’, Business Initiative Leading Development (BUILD) said that it motivates possible taxpayers to be kept out of the tax net. It suggested that NBR should incorporate the refund provision in the law as refund is actually now nearly 20 per cent while non-refundable source tax increases actual tax.
BUILD urged the NBR to frame audit guidelines for the taxpayers so that they can understand why they are considered for tax audit. It called for setting up a common or central bonded house to encourage SMEs to be exporters gradually and suggested bringing partial exporters under the bonded facilities.
NBR Chairman Abu Hena Md Rahmatul Muneem said, “We are not in such a situation where we have to be dependent on foreigners for everything and fulfill their each demand.”
“When the law was enacted, many benefits were given blindly as there was no local industry at that time. Now local industry has grown. We facilitated foreign investors. But there is no end to their demand.”
“We will review the facilities and squeeze these. We will not provide facility for importing things like office stationery, and chairs. Why quality materials for pre-fabricated buildings should not be available in the country and why wooden chairs should be imported from abroad,” he questioned.
Besides, Bangladesh Economic Zones Authority (BEZA) placed their demands at the meeting where senior NBR officials were present.