Prime Minister's Private Industry and Investment Adviser Salman F Rahman claims that the tax collection process is in asiloedstate, saying, “Officials from different departments like Tax, VAT, and Customs, operate without talking to each other.
“If major reforms are not done, then the tax to GDP ratio will not increase,"
Salman asked, "What is the National Board of Revenue (NBR) doing today?" and said, "They are imposing more taxes on those who pay it, but those who are outside the tax net remain outside the net. NBR has taken no initiative to bring them within the tax net.
"If the mindset regarding tax collection is not changed, and if the policy is not changed, then the tax to GDP ratio will further decrease."
Salman made the remarks while addressing a roundtable on Investment Climate for Smart Bangladesh at a hotel in Dhaka on Sunday.
He further stated, "I think the IT sector is at premature level to be withdrawn of tax reliefs. The tax relief withdrawal is not the solution for the sector, rather more incentives are needed as we are going to fall into a serious challenge in terms of cybersecurity and in the deep fake arena."
"This industry is going to be the real saviour of our economy. So everything should be done carefully," he said, adding that necessary investment and financing are required to install data centres to protect our data and enhance skilled human resources and innovation.
State Minister for Posts, Telecommunications and Information Technology Zunaid Ahmed Palak said, "The ITES sector has played an important role in generating $2 billion in exports, two million employment opportunities, facilitating state work, and digitising government services. I am happy but not satisfied with the growth as we want to do more,"
He questioned how we could remake the course curriculums of our academia according to the shift that has happened in the world in the last 15 years, saying, "I did not get any course related to Artificial intelligence in 150 universities. Cybersecurity course is being taught at one university but there is no course in microchip design. These should be embedded because to create capable human resource and to attract more foreign direct investment (FDI).”
"If the smuggled laptop imports are caught through the integration of BTRC, NBR can increase revenue by Tk 2,000 crore. There is no need to tax the IT sector. So we have to rationalise in three phases: 2026, 2031 and 2041.
"If incentive continues, there will be possibility to increase $1 billion in FDIs, generate a billion skilled manpower and $5 billion in export earnings within next five years," he said.
Dhaka Chamber of Commerce and Industry (DCCI) President Ashraf Ahmed said, "It is true that taxes have to be paid, and it is also true that investment in ICT should be increased. These two can be combined with providing grants available in many countries.
"If the NBR thinks that tax exemption of Tk 1,400 crore has been given in this sector, then we have no objection if it is provided again as a grant. There are many funds all over the world including venture capitals. Financing should be increased in this sector," he said.
Programme chair ShameemAhsan, also the president of the Venture Capital and Private Equity Association of Bangladesh (VCPEAB), gave a presentation and shared that the tech industry is worried about the withdrawal of incentives and policy supports, including tax breaks and export subsidies because it will directly impact local and foreign investments.
"Such a move will worsen the graduate unemployment and the brain drain situation, put pressure on the forex reserve, and increase risks of data sovereignty and national cybersecurity. The cost of automation towards smart transition will increase as well," he said.
Earlier, the International Monetary Fund had proposed withdrawing the tax exemption facility for the information and technology industry. The exemption facility is scheduled to end in June 2024, meaning, as per the global lender, there will be no scope to extend it further.
