Businesses demand cuts in corporate taxes

Abdul Matlub Ahmad

Business leaders are expecting a budget that would reduce corporate tax, as the cost of doing business is on the rise.

They also said the government should take up schemes to spur expansion of local industries and create more employment opportunities.

Abdul Matlub Ahmad, president of the Federation of Bangladesh Chambers of Commerce and Industry, called for bringing down corporate tax for export industries, especially for garment and textile, to 18 percent from 35 percent now.

“I expect the government will put stress on the expansion of local industries and the utilisation of the expanded domestic market,” Ahmad said. He also demanded reduction in the number of slabs in supplementary tax and hopes that the infant local industries will not face competition from finished imported products.

The VAT and tax nets need to be widened in order to get higher revenues, Ahmad added.

The Foreign Investors' Chamber of Commerce and Industry, a trade body of overseas investors in Bangladesh, suggested corporate tax should be brought down by 10-15 percent.

Siddiqur Rahman

FICCI also demanded increasing the minimum taxable income ceiling to Tk 3 lakh from existing Tk 2.5 lakh.

Import substitute industries are producing intermediate goods consuming imported materials and they face severe competition in international market due to payment of advanced income tax (AIT) at 5 percent and tax deducted at source at 5 percent, it said.

“Therefore, FICCI expects a reduction of AIT from 5 percent to 1 percent for the manufacturing industries,” said FICCI President Rupali Chowdhury.

Siddiqur Rahman, president of Bangladesh Garment Manufacturers and Exporters Association, demanded reinstatement of 10 percent corporate tax for the garment sector.

The BGMEA said the apparel sector should be kept out of the VAT purview as garment exporters are already entitled to the duty drawback system.

Rupali Chowdhury

Duty drawback is the rebate of duty chargeable on imported materials used in the manufacture and export of goods. The exporter may claim drawback or refund of excise and customs duties paid by his suppliers.

“If the sector is kept out of VAT, exporters will not face any hassle for duty drawback,” Rahman said.

The budget should look to rationalising the cost of doing business, and simplifying the tax rules, regulations and processes, said Hossain Khaled, president of Dhaka Chamber of Commerce and Industry.

He also called for creating a better local and foreign investment ecosystem.

Khaled also said the proposed 15 percent VAT under the new law needs to be abolished.

The existing package or fixed VAT needs to continue until 2021 with gradual increases annually for the greater interest of micro, small and medium enterprises.

In a stark contrast to other chambers and trade bodies, the foreign investors' chamber strongly recommended the implementation of the new VAT law.

The FICCI said the existing law has addressed many business-unfriendly issues like price declaration and restriction on rebate in some cases.

Hossain Khaled

Price declaration is the most complicated system with lots of ambiguity, which often leads to harassment for transparent taxpayers.

“However, if, for any reason, the implementation of the new law is delayed, FICCI strongly recommends withdrawal of the price declaration system with immediate effect,” she added.

The Dhaka chamber said the government should allow the investment of undeclared money in the manufacturing and real estate sectors and infrastructure bonds.

In addition, effective project implementation and monitoring measures must be in place to expedite mega infrastructure projects and economic zones for attracting investment, Khaled said.

Rahman of BGMEA also demanded duty-free import of all kinds of fire safety equipment so that factory owners can install them at lower costs.

The tax at source should be reduced to the previous rate of 0.3 percent from the current rate of 0.6 percent, as exporters have been facing challenges in doing business, Rahman added.

Mahbubul Alam

“We want bank loans at a single-digit interest rate for bringing more investment to industries. We want a business- and investment-friendly budget,” said Mahbubul Alam, president of the Chittagong Chamber of Commerce and Industry.

“The budget should at first attract domestic investment and then foreign direct investment to create more employment opportunities.”