BCI urges NBR to raise VAT-free turnover limit to Tk 4 crore

The Bangladesh Chamber of Industries (BCI) has urged the National Board of Revenue (NBR) to increase the VAT-free annual turnover limit to Tk 4 crore from Tk 3 crore in FY2023-24 for micro and small enterprises.

This needs to happen because operating costs have risen due to inflation and a drop in actual profit, BCI leaders said at a pre-budget discussion Wednesday.

The event, organised by NBR, was presided over by NBR Chairman Abu Hena Md Rahmatul Muneem at the board’s head office in Dhaka.

“The gross profit is determined sector-wise but it’s not rational. Besides, if companies witness lower sales and a drop in total profit or incur losses compared to the previous year, revenue authorities do not take that into consideration. These practices need to stop,” said BCI President Anwar-ul Alam Chowdhury.

“Turnover tax is levied despite business losses. It’s a huge burden on the organisation,” he said.

The tax administration deducted tax at source as the lowest as per Section 82C of the Income Tax Act. But it is taken later again in the assessment. They proposed to treat tax at source as the final tax liability, he added.

In its proposal for the national budget for FY2023-24, BCI called for abolishing the provision of treating income from other sources if tax is not deducted at source in case of acquisition of assets.

It also proposed to fix a maximum source tax at 3 per cent on industrial raw material imports, exempt VAT on all sorts of utilities in the micro, cottage and small industries, and give bonded-warehouse facilities to sector-based export-oriented enterprises comprising small industries and women entrepreneurs.

Besides, it urged to give tax holidays for young industrial entrepreneurs for a minimum of five years and fix 10-15 per cent tax for them from the following years.

According to BCI, NBR has to cut 2.5 per cent corporate tax, impose 0.1 per cent tax at source and 10 per cent income tax for all export sectors, raise the tax-free income limit to Tk 5 lakh for individuals, make the tax system completely digital, impose 10 per cent tax on dividends as well as 2 per cent tax reduction for industrial establishments.