Businesses demand reforms in tax system
Business leaders in Chattogram have stressed the need for reforms in the tax system, such as policies that do not require frequent changes, as well as waiving advance tax in order to boost both domestic and foreign investment in Bangladesh.
They made these comments while addressing a post-budget dialogue held virtually by the Chittagong Chamber of Commerce and Industry (CCCI) yesterday.
CCCI President Mahbubul Alam moderated the dialogue, which featured the leaders of various business associations as panel discussants.
Md Jashim Uddin, president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), hailed the government for reducing corporate tax, providing waivers on value added tax (VAT) and a tax holiday in the proposed budget for fiscal 2021-22.
But considering that all businesses have been hurt by the ongoing coronavirus pandemic, he demanded the complete withdrawal of advance income tax (AIT) and advance trade VAT (ATV), which he claimed increases the cost of business while bringing little to no benefit for the government.
"If the AIT is returnable then why should the government even take it," Uddin said, adding that it is difficult to get the AIT back from the National Board of Revenue (NBR) once paid.
CCCI President Alam emphasised on the need to widen the tax net while reducing the tax rate on existing taxpayers.
He also urged the leaders of different business associations, including the FBCCI, to push the government to expedite the different priority projects in Chattogram, including ending waterlogging in the city, dredging the Karnaphuli river and constructing the Bay Terminal at the Chattogram port.
"If the Bay Terminal is not complete by 2024, foreign trade through the country's premier port will be hampered," Alam said.
Rupali Chowdhury, president of the Foreign Investors Chamber of Commerce and Industry (FICCI), said foreign direct investment in Bangladesh was very low compared to neighbouring countries such as India.
Although the government is undertaking a number of infrastructure development projects, more work needs to be done in terms of legal and policy support to attract foreign investment.
Besides, many policies are inconsistent, she said.
For example, there was no regulation regarding paying 15 per cent VAT when investors first started buying land in the country's economic zones.
However, the NBR suddenly decided to impose this charge, which is discouraging, Chowdhury said.
With regard to the 10-year tax holiday for different industries outside the economic zones, she said the facility means that these companies basically enjoy the same benefits that companies inside the zones do.
"So what extra benefit are we going to offer the investors inside the economic zones," she asked.
Faruque Hassan, president of the Bangladesh Garments Manufacturers and Exporters Association (BGMEA), echoed the same.
Terming frequent policy changes as discouraging for investment, Hassan said any new tax or policy should remain the same for at least five years.
He went on to say that the proposal to continue providing 1 per cent additional cash incentive for the garments industry in the new budget would help the sector in terms of increasing cash flow.
Hassan hoped that Bangladesh's exports will return to pre-pandemic levels by October this year, on condition the Covid-19 situation does not worsen.
Alamgir Kabir, president of Bangladesh Cement Manufacturers Association (BCMA), demanded the complete withdrawal of non-adjustable AIT for cement industries.
Although the AIT has been reduced from 3 to 2 per cent in the proposed budget, it is still a burden for the import dependent sector, he said.
Besides, Tk 500 needs to be paid as import duty per tonne of clinker, the main raw material of cement, he said.
"So, the average import duty stands at 10 to 11 per cent, which makes it difficult for the highly competitive sector to survive," Kabir said.
Lauding the proposal to reduce corporate tax in the new budget, Chittagong Stock Exchange Chairman Asif Ibrahim proposed to increase the tax gap between listed and non-listed companies so that good companies get encouraged to come to the capital market.
The EC Committee Chairman of Islami Bank Bangladesh, Professor Md Selim Uddin, said in case of low tax collection, the pressure would increase for loans to be taken from domestic sources.
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