The National Board of Revenue will focus on bringing consistency among the tax measures related to the stockmarket, NBR Chairman Md Mosharraf Hossain Bhuiyan said yesterday.
The tax administrator will also consider making the corporate tax rate attractive for listed companies, he said at a pre-budget discussion.
The NBR organised the event at its headquarters to get views from economists and accounting experts as part of its regular exercise for the framing of fiscal measures for 2018-19.
“There should be consistency in the policies related to the stockmarket. This will help curb sudden ups and downs in the market,” said Bhuiyan.
The comments came in response to recommendations for avoiding frequent changes in tax measures for the stockmarket and to cut the corporate tax for listed companies.
The gap in corporate taxes for listed and non-listed companies should be wider to lure more firms into going public, said Abu Ahmed, honorary professor of the Department of Economics at Dhaka University.
At present, non-listed companies pay 35 percent corporate tax when listed ones pay 25 percent.
Ahmed proposed lowering the tax for listed companies to 20 percent.
“Good firms will feel encouraged to be listed with the stock exchanges. They will be able to declare higher dividends benefitting the shareholders. Besides, they will be more transparent in disclosure.”
Ahmed said the high tax rate was not helping the tax collector get more revenue as many firms hid incomes by refraining from getting listed.
He also demanded that the tax collector hike tax-free dividend income from the present Tk 25,000. Several years ago, dividend income of up to Tk 1 lakh was exempted from tax, he said.
Ahsan H Mansur, executive director of the Policy Research Institute (PRI) of Bangladesh, said corporate tax rates should be reduced gradually to prevent putting too much pressure on revenue collection.
He also suggested that the revenue administrator should collect wealth tax by assessing wealth of individuals.
“If a person bought a house in Gulshan at Tk 60,000 in 1950, he will not have to pay wealth tax. But if anyone purchases a small apartment today, he will have to count tax on wealth. This is quite inequitable,” he said.
“Either you do it on a mark-to-market basis [assessing recent market price] or you do not do it. Use simple wealth assessment and impose tax on the basis of that, not on the income,” said Mansur, adding that the system has put a heavy burden on individuals.
He also recommended the NBR strengthen automation of the VAT system.
“The VAT online project has almost become stalled…Automation should be completed for public interest,” he said.
“It was decided that automation will be done based on the VAT Act 1991. It has been made hostage in absence of approval from the Federation of Bangladesh Chambers of Commerce and Industry,” he added.
Mamun Rashid, managing partner of PricewaterhouseCoopers (PwC) Bangladesh, said Bangladesh has been growing, driven by consumption growth, for which the domestic market was expanding, raising interest of investors.
But many foreign investors feel discouraged for various reasons, including ambiguities in existing laws, he said.
Sushmita Basu, partner and leader at Bangladesh Tax and Regulatory Practice, PwC, suggested the NBR end the practice of taxing the same dividend multiple times.
“The law and business regulations in Bangladesh require large corporates to build subsidiaries and special purpose companies,” she said.
Under such a structure, the dividend paid by a company to another is taxed more than once as it passes through different tiers, she said.
The PwC also recommended that the NBR introduce filling of VAT returns online without further delay.
The NBR chief sought suggestions on ways to bring under the tax net the taxpayers who could not be traced after taxes were deducted at the source of their incomes.