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Next budget should devise guidelines to meet economic challenges

25 May 2023 00:00:00 | Update: 24 May 2023 23:34:16
Next budget should devise guidelines to meet economic challenges

The budget for the fiscal year 2023-24 should formulate guidelines to meet all challenges, including Russia-Ukraine war impact, dollar crisis, boosting investment, export diversification, LDC graduation and removal of current obstacles to local industries, Bangladesh Chamber of Industries (BCI) President Anwar-ul Alam Chowdhury (Parvez) tells The Business Post’s Rafikul Islam in an interview

What do you want in the upcoming budget for FY24 amid the current economic predicament?

BCI is a national industry chamber representing all types of industries across Bangladesh. We always try to create young, micro and small industrial entrepreneurs, boost investment, expand industrialisation, protect domestic industries, alleviate poverty and remove all kinds of obstacles to local industries.

However, the next budget should be the result of the combination of all issues, including Russia-Ukraine war impact and national development target, amid dollar crisis, LDC graduation, 4IR and SDGs. We hope that the next budget will act as a catalyst for meeting all challenges.

What proposals do you make for creating more young entrepreneurs?

We should encourage investment to create more entrepreneurs through policy support. Turnover tax is levied despite the loss of business which burdens the organisation. It should be addressed. Our corporate management should be as per international standard.

A special fund has been created in the budget to finance young entrepreneurs, but due to a lack of proper policies, the benefits of this fund have not been reaped. We propose to frame policies for disbursement of special funds for young entrepreneurs.

BCI proposes to fix source tax up to 3 per cent on import of industrial raw materials. We recommend VAT exemption on all types of utilities in micro, cottage and small-scale industries of the country.

We also propose tax holiday for micro, cottage and small-scale industries and young entrepreneurs for at least five years, and later, the tax rate can be fixed between10 per cent and 15 per cent.

We also recommend providing bonded-warehouse facilities to sector-based joint export-oriented enterprises comprising small-scale industries and women entrepreneurs.

To boost local and foreign investment, please share your proposals on tax management for FY24

Bangladesh’s tax system should be fully digitised to make it transparent, speedy, and modern so that everyone gets encouraged in paying taxes. It will help widen the country’s tax net as well.

I propose 2 per cent tax rebate for eco-friendly environment and green certified industries in the country.

The SME sector in Bangladesh did not develop in that way. We should look at where policy support is needed. When we are implementing single accounts, we will take steps to ensure that gross profit (GP) is no longer taxed.

Businesses claim that cost of doing business has increased in recent months. What are your suggestions in this regard?

Due to high inflation, the cost of supply and production of goods has gone up a lot. In particular, the real profits of micro and small entrepreneurs have come down. Considering this, we propose to raise the upper limit from Tk 3 crore to Tk 4 crore in the annual turnover of business outside the scope of Value Added Tax (VAT).

Besides, we propose to reduce the existing tax rate to zero per cent from 5 per cent in case of import of raw materials used in the production of daily essential food products’ manufacturing companies registered by VAT. VAT activities should be online-based fully.

What are your recommendations for corporate tax in the upcoming budget?

The corporate tax rate is much higher in Bangladesh than that of neighbouring countries. BCI proposes to reduce it to 2.5 per cent percentage unconditionally. [Now corporate tax rate is 20% for listed companies, 27.5% for non-listed companies and 22.5% for one-person companies in Bangladesh.]

As a result, business at local level will be encouraged, and investment in the country will play a supporting role here. We propose to reduce the corporate tax rates in phases.

Amid high inflationary pressure, what’s your opinion on tax-free income limit for individuals?

We propose to revise the existing individual tax exemption limit and existing income tax rates in the next fiscal year, taking into account inflation and cost of living. BCI recommends raising the tax-free income limit for individuals up to Tk.5 lakh (it is Rs 7 lakh in India).