Tax measures key to navigating economic shocks

To tackle the ongoing economic headwinds, absorb the upcoming shocks, and survive in the competitive market, the country’s business communities have called for tax rationalisation and simplification in the FY24 budget to encourage investment, reduce business costs, and ensure smooth functioning of the supply chain.

They have also demanded the rationalisation of advance income tax, overall digitalisation of tax return filing to reduce complexities, and creating a favourable environment for local and foreign industries ahead of least developed country (LDC) graduation.

This came as Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) President Md Jashim Uddin, on behalf of the business communities, presented a proposal for the FY24 budget at the 43rd meeting of the Consultative Committee of the National Board of Revenue (NBR) at Pan Pacific Sonargaon Dhaka on Thursday.

Finance Minister AHM Mustafa Kamal was the chief guest at the event presided by NBR Chairman Abu Hena Md Rahmatul Muneem. Former FBCCI president Mahbubur Rahman was also present, among others.

Tax recommendations

The FBCCI president said the government should formulate a modern income tax law by adjusting the demand for domestic investment and introducing a slab-wise uniform corporate tax rate to reduce unequal competition in the market.

The government should also rationalise advance income tax gradually to 3 per cent from the existing 5 per cent, he said.

The apex trade body is calling on the government to raise the tax-free income limit for individual taxpayers to Tk 4 lakh from Tk 3 lakh in the next fiscal year considering high inflation and the overall economic situation, Jashim said.

The FBCCI proposed keeping all agro-based essential commodities out of the purview of source tax to reduce the price burden on consumers.

Mir Nasir Hossain, a former FBCCI president, said the government has to restructure corporate tax by introducing a uniform rate. “For example, every type of listed company should be subjected to the same tax rate. This will help reduce inequality.”

Md Sameer Sattar, president of Dhaka Chamber of Commerce and Industry (DCCI), said the government has to cut corporate tax by 2.5 per cent because “our tax rate is comparatively higher than other nations.”

Cutting corporate tax will ensure an investment-friendly environment in the country, he said. Stressing the need to increase the tax-to-GDP ratio, he also said the NBR has to focus on expanding the tax net outside Dhaka and Chattogram.

Bangladesh Garment Manufacturers and Exporters Association Vice-President Shahidullah Azim said the government has to set source tax at 0.5 per cent as earlier and the rate should continue for the next five years.

Kazi Belayet Hossain, president of the Bangladesh Frozen Foods Exporters Association, demanded the withdrawal of advance income tax.

VAT recommendations

The FBCCI called on the government to set VAT on all goods and services at 15 per cent to reduce inequality and complexities as well as ease tax management. It also demanded advance tax be withdrawn.

The FBCCI president said the NBR has to set up another large taxpayers unit (LTU) in Dhaka and Chattogram as well as include more enterprises in LTUs.

Bangladesh Textile Mills Association (BTMA) President Mohammad Ali Khokon said the government should withdraw VAT on recycling fibre at the buying and selling stages.

Imran Hasan, secretary general of Bangladesh Restaurant Owners Association, said the NBR should reduce VAT on house rent to 5 per cent from the existing 15 per cent.

Shomi Kaiser, president of the e-Commerce Association of Bangladesh, said the government should withdraw VAT on house rent as well as decrease VAT on delivery to 5 per cent from the existing 15 per cent for e-commerce SME entrepreneurs.

Md Helal Uddin, president of the Bangladesh Shop Owners Association, said the government should install sector-wise electronic fiscal devices (EFDs) so that unequal competition can be reduced.

Besides, the FBCCI demanded VAT offices be set up in upazilas.

Import duty recommendations

The apex business body called on setting 1-3 per cent duty on capital machinery and raw materials, continuing the tariff facility for the Made in Bangladesh scheme, imposing regulatory duty to control imports and trade balance, and expanding the bond facility to diversify exports.

BTMA’s Khokon said the government should withdraw all types of duty on man-made fibres.

Abdul Momen Molla, president of the Narsingdi Chamber of Commerce and Industry, proposed increasing the duty on apparel imports to encourage local manufacturing.

Call for reducing harassment

FBCCI former director Obaidur Rahman said NBR officials without any permission from the higher authorities raid factories and seize business documents.

The government has to take steps to reduce such harassment, he said.

Caution urged in reducing exemptions

The FBCCI called on the government to maintain caution while making decisions on reducing exemptions, taking the ongoing economic situation into consideration instead of the impacts of exemptions, their durations, and their effects on revenue collection.

“Besides, the government should introduce the transaction value system in place of the existing tariff value or minimum value system. This is because the existing system fuels money laundering and contradicts the international standard practice,” Jashim said.

“The government has to introduce central bond to expand the special bond facility in order to diversify exports ahead of LDC graduation,” he added.