Govt reviews tax proposals
Exporters, including apparel makers, will now have to pay 0.6 percent tax at source on their income from export from the upcoming fiscal year, as the government slashed the rate from the proposed 1 percent.
At present, the National Board of Revenue collects 0.3 percent tax from garment manufacturers on their annual income from exports. The rate is 0.6 percent for other exporters.
In his budget speech on June 4, Finance Minister AMA Muhith had proposed to increase the rate to 1 percent for all exporters.
The change was brought through the passage of the Finance Bill 2015 in parliament yesterday along with some other changes. Muhith placed the changes in the House while making his closing remarks before the bill got through in voice vote unopposed.
Originally, the bill was passed with 0.8 percent tax at source for exporters. But Prime Minister Sheikh Hasina requested the finance minister to reduce it to 0.6 percent. She argued that if the exporters did well next year, the tax rate could be increased. The finance minister accepted the PM's line of reasoning.
Also upon Hasina's advice, the duty and VAT on raw materials for producing cancer medicines have been withdrawn. Moreover, there will be no VAT on Unani, Ayurvedic and herbal medicines at production stage.
The finance minister also lifted the 5 percent import duty on book import and the 2 percent advance income tax that he had earlier proposed on import of food commodities such as rice, sugar, wheat and edible oil.
On the other hand, the supplementary duty on import of motorcycle in completely built form has been increased to 60 percent from the existing 45 percent in efforts to encourage local assemblers.
While some of the changes seem logical and will certainly give the middle class people some tax relief, a few were brought under pressure from lobby groups, a fact Muhith himself candidly confessed.
“There has been some intense lobbying and I have backtracked, falling victim to such lobbying,” Muhith said, for instance, about lifting the proposed 15 percent VAT on compact disk import.
After the bill passage, corporate tax for listed banks will be 40 percent, down from the proposed 42.5 percent. However, it will be applicable to new banks, non-banking financial institutions and insurance companies that got licence in 2013 and are not listed with the stock exchange.
For those living in Dhaka and Chittagong city areas, the minimum tax will be Tk 5,000, for those in other cities Tk 4,000 and for those outside city corporation areas Tk 3,000. The finance minister's original proposal was a Tk 4,000 minimum tax for all irrespective of where they live.
The condition of submitting TIN (tax identification number) by parents of students of English medium schools in city corporations and municipalities will remain, although parents of English medium school students in other areas have been exempted from it.
The government relaxed the condition of importing less paint for next three years to help the assembling companies set up painting plants.
Muhith recommended creating a separate HS (harmonised system) code for high capacity air conditioner import and imposing 25 percent import duty, 4 percent regulatory duty and other duties on import of air conditioners with capacity of 90,000BTU to 2 lakh BTU. But there will be no supplementary duty.
The proposed 10 percent VAT on tuition fee at private universities, private medical colleges and private engineering colleges has been reduced to 7.5 percent.
Supplementary duty on dish antenna cable import has been increased to 30 percent from 20 percent.
The minister said he placed the changes, considering the debate on some proposals in parliament and the reactions from the prime minister as well as from all over the country.
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