Bonded warehouse benefit for new export products
The revenue authority will extend duty-free or bonded warehouse benefit for import of raw materials to make products for overseas markets as part of the government's efforts to expand the export basket.
“I can give you assurance that if you want to export and ask for bonded warehouse facility I will provide it, but not for the domestic market,” said National Board of Revenue Chairman Md Mosharraf Hossain Bhuiyan.
Since he took up the reins of the NBR in January, Bhuiyan has extended bonded facility for a host of new export items, he said at a luncheon organised by the Metropolitan Chamber of Commerce and Industry at its office.
His comment comes following pleas from the motorcycle manufacturer Runner Automobiles for incentives and bonded warehouse privilege for raw materials and components to make two-wheelers for overseas markets.
Bhuiyan also agreed to extend duty-free import benefits for components of 250cc engine capacity bikes, which are not allowed in Bangladesh, under the bonded warehouse facility.
At present, the revenue authority provides duty-free import benefit for raw materials for garment and garment accessories, leather, shipbuilding and some other sectors.
The NBR chief also welcomed another proposal for fiscal benefits from the Bangladesh Employer's Federation President Kamran T Rahman for companies that employ challenged persons.
Bhuiyan also said the NBR is thinking about reducing corporate tax.
“Some of the business personalities tell me that revenue will increase if the corporate tax is reduced.”
The reason being, many of the non-compliant entrepreneurs or industries will fall in line. “We are thinking about it,” he said, adding that the hypothesis might be tested in the real world in the next 2-3 years. Many of the business people complain that the taxes in Bangladesh are very high, he said.
“But at the same time, all of us, including business persons believe that we have to increase the tax-GDP ratio for sustaining development.”
Tax cuts will cause reduction in revenue flow. “The easy answer is to increase the tax base as well as to make our people tax compliant.”
He said the NBR is trying to make the value-added tax system convenient for businesses by keeping several rates of VAT.
At the event, the MCCI demanded the NBR of careful assessment of tax exemptions being given to various sectors, increased allocation for education and skills development along with improvement in physical infrastructure and timely implementation of economic zone and other investment-related projects.
“Our greatest strength and our greatest resource is human resource. And we need to allocate funds to develop this to meet the challenges of the next several decades to come,” said MCCI President Nihad Kabir.
While the NBR's responsibility is to help in revenue collection and budget formulation, it can also give attention to implementation issues.
“We think we will get a better result for our limited resources,” she said.
The MCCI also wanted the tax administration to withdraw the provision in the tax law that makes employers responsible for ensuring the filing of tax returns of employees.
The trade body demanded withdrawal of another provision in the tax law that disallows expenditure on foreign technical know-how or royalty payments if the amount exceeds 8 percent of the total net profit disclosed in account statements.
“This provision seems to be an irrational parameter for limiting such payments. Foreign brands or manufacturers who want to invest in Bangladesh or partner with Bangladeshi companies cite this as impractical.” The MCCI opposed collection of tax several times the dividend income.
Currently, profits made by a subsidiary are taxed once as corporate income tax. When the post-tax profits are forwarded to the parent company, another round of tax ensues.
The MCCI also called for implementation of the new VAT system under VAT and Supplementary Duty Act 2012 through a strong and transparent regulatory process.
For large businesses, the provisions of the new act will be beneficial, she said. On the issue, Bhuiyan said some tasks of the VAT online project are yet to be completed because of delays in finalising rules related to the VAT law.