As the small and medium enterprises sector is hit hard by the Covid-19 pandemic, the government should reduce tax for the sector in the budget for fiscal year 2021-22 to help it recover from the economic fallout, SME foundation chairperson Md Masudur Rahman told The Business Post’s Md Joynal Abedin Khan in an interview.
What measures do you deem required for the SME sector to recover from the Covid-19 pandemic fallout?
With the outbreak of Covid-19 in Bangladesh last year, the country's micro, cottage, small and medium enterprises experienced severe impact as they could not sell their products for the lockdown. As a result, they have suffered financial losses and are still going through a dull time. So, the government should reduce taxes for the sector based on the necessity to help their recovery. I think in the budget for FY22, corporate tax for the sector should be cut to 20 per cent from the existing 32.5 per cent.
What do you think about the tax rate for new entrepreneurs amid the pandemic?
I have a special plea for a tax holiday for 10 years for new entrepreneurs as they will take the risk to run the business amid the coronavirus pandemic. The sector generates huge employment and contributes a lot to the national economy. For generating more jobs to ensure employment for the rural people, the government should consider tax holiday.
Do you think that advance income tax creates pressure on SME entrepreneurs?
Small traders have limited access to funds and they don’t have institutional capacity. Advance income tax increases business costs. The government should exempt advance income tax for the SME sector for both local and export markets to give them relief. In addition, the highest income tax for SME owners should be 3 per cent based on net annual export earnings.
How do you assess the government provided facilities for women entrepreneurs?
Though the government is providing special financial support to the women entrepreneurs the next budget should create an opportunity for them so that they can avail funds for working capital. Already, the Bangladesh Bank has instructed the banks and non-banking financial institutions to disburse mandatory 25 per cent loans among women entrepreneurs.
Do you think women SME entrepreneurs are getting benefits from the stimulus package?
The government initiative is enough but due to lack of proper implantation, the women entrepreneurs are not getting the proper benefits of it. In a bid to help the sector recover, the government has offered a stimulus package of Tk 100 crore but the lion share of it remained undistributed. In the next budget, the government should take measures to ensure proper disbursement of the packages. And the Bangladesh Bank should monitor the disbursement so that entrepreneurs can get funds from the packages. However, the decision of disbursing loans through non-government organisations and microfinance intuitions is a good approach.
What kinds of obstacles the women SME entrepreneurs face in running their business?
Informal entrepreneurs are remaining in peril as they are deprived of government and non-government financing and other facilities and they also need to pay extra for remaining out of the formal entrepreneurs.
