NBR against tax exemptions for AKDN, AUW, IUT, icddr,b

The National Board of Revenue (NBR) says it does not want to give import tax exemptions to the Aga Khan Development Network (AKDN), the Asian University for Women (AUW), the Islamic University of Technology (IUT), and icddr,b.

It has urged the authorities concerned to adjust the taxes and duties in the budget that were exempted in the previous years for these organisations.

Besides, it said the ministries concerned should pay all sorts of future duties and taxes – that will concern the purchase and import of products by these organisations – from the budget.

The NBR said this at a recent meeting with the foreign ministry, the Health Services Division, the health ministry, the Secondary and Higher Education Division, and the education ministry.

However, the implementation of the decision will take time as the ministries concerned would have to adjust the already exempted taxes and duties in the budget and then get the final nod from the finance ministry, NBR officials said.

They said the revenue board is now against tax exemptions to increase the tax-to-GDP ratio.

If an organisation requires exemptions for any special case, it has to include the fund in the budget and pay the duties, they also said.

Meeting sources said the NBR is working to stop all kinds of tax exemptions that do not concern exceptional public interests.

Some ministries are already implementing the NBR’s decision to reduce tax exemptions but some are facing complexities regarding tax payments, sources said. The revenue board said all ministries have to pay all sorts of duties and taxes for project implementation as well as the procurement of products for any kind of reparation or operation.

It also asked the entities concerned to clear project-related value added tax (VAT), import duties, supplementary duties, and income taxes instead of applying to the revenue board for exemptions.

An NBR official told the meeting tax exemption is one of the major obstacles to improving the tax-to-GDP ratio and there is no alternative to increasing this ratio to sustain the country’s ongoing development.

“Bangladesh will soon graduate from the Least Developed Country (LDC) category. We are moving forward with the goal of becoming an upper middle income country by 2031 and a prosperous one by 2041.”

The finance minister also said the same in the budget speech. He said, “Instead of giving tax exemptions, in each case, whether it is project implementation or maintenance or the purchase of essential commodities, the required amount of tax [VAT, import duty, supplementary duty or income tax] should be allocated in the related office’s budget, and required taxes should be paid from that.”

“We should not issue special orders for exemptions unless there is an extraordinary situation. This will bring transparency in the revenue administration and help us manage budget deficits better. It is my firm belief that the tax-to-GDP ratio will significantly increase if the exempted tax is collected, and this will accelerate the pace of Bangladesh’s development.”

The International Monetary Fund (IMF) called for the withdrawal of tax and VAT exemptions in all forms during its recent Dhaka visit. It gave the condition as Bangladesh sought $4.5 billion in loans from the lending agency.