FICCI calls for higher health allocation; BCI for measure for recovery from downturn
A higher allocation could have been made for the healthcare sector considering the risks posed and inadequacies in infrastructure which became very much evident during the Covid-19 pandemic, according to the FICCI.
"We feel this GDP growth target of 8.2 per cent will be highly challenging," the Foreign Investors Chamber of Commerce and Industry (FICCI) said in a statement Friday.
The platform of foreign investors particularly appreciated some proposals such as reduction of corporate tax rate for non-listed companies from 35 per cent to 32.5 per cent, which it says would encourage industrialisation and attract foreign direct investment.
While this is a welcome change, this reduction should be extended to banking, telecommunication and tobacco sectors, it said.
The FICCI also appreciated a proposed increase in the tax-free income threshold and reduction of tax rate applicable for taxpayers other than companies and local authorities.
It also appreciated a reduction in advance tax on imported raw materials for manufacturing industries from existing 5 per cent to 4 per cent alongside simplification in processes of VAT on foreign services and acceptance of gas, water, electricity and telephone bills as tax invoice.
Allowing 80 per cent VAT rebate on transportation service as input credit is a good move, although this should have been extended to 100 per cent of the actual VAT paid for carrying VAT chargeable goods, the FICCI said.
However, the platform expressed concerns over some issues like limiting valid promotional expenses of companies to 0.5 per cent of disclosed turnover alongside overseas travelling expenditure to 0.5 per cent from 1.25 per cent.
This may increase the effective tax rate from anything between 5 per cent and 15 per cent depending on the company's size, it added.
The association also spoke against introducing 2 per cent withholding tax on local supply of essential commodities, such as rice, flour, potato, garlic and onion through local letters of credit.
The FICCI also expressed concerns over allowing undisclosed money to be deposited in the banking channel on payment of a low income tax sans any satisfactory explanation of source, saying that it might contradict prevailing anti-money laundering guidelines.
The chamber recommends making necessary amendments to the proposal after consultations with relevant regulatory bodies.
It also pointed out an increasing in appeal fee to commissioners and Appellate Tribunal from 10 per cent to 20 per cent, saying it would ultimately increase overall deposits to up to 50 per cent of the disputed amount and create adverse issues.
To encourage local manufacturing sector, supplementary duty on local manufacturing alongside VAT should be removed or reduced, it said.
The supplementary duty (SD) has been increased to 5 per centon services provided through mobile phone SIMs and RIM cards, which goes against the government's digital roadmap and would discourage foreign investment.
The chamber said it would have been happier if some of its requested concerns were addressed in this budget, namely withholding tax provisions for business-to-business supply and non-resident service providers.
It also said it would have been better if the government withdrew the minimum tax provision (2 per cent of gross receipts for telecom, tobacco 1 per cent, individuals 0.5 per cent and others 0.6 per cent) and exempt withholding tax on interest payable against foreign currency loans and deposits obtained by offshore banking units.
The chamber also proposed simplifying central business identification number (BIN) provisions and clarity in the rules and
In another statement, the Bangladesh Chamber of Industries (BCI) said the plans for overcoming the economic downturn were insufficient and should have been broader with more precise and realistic action plans.
It lauded incentives and allocations for healthcare alongside trade and commerce, including, agriculture, fisheries and livestock, for food security.
Anwar ul Alam Chowdhury Parvez, the BCI president, urged for special incentives to deal with unemployment induced by the pandemic.
The government's incentives packages must be disbursed properly because there will be no expected benefit if they are delayed six months, he said.
Mohammad Ali Khokon, president of Bangladesh Textile Mills Association (BTMA), said the proposed reduction of VAT from 5 per cent on total sales to Tk 6 per kilogramme of manmade fibre yarn would not bear any fruit for the millers.
"We want further reduction of this amount to Tk 2 per kg," Khokon said in a statement yesterday.
He demanded that the government continue collecting source tax on export receipts at 0.25 percent rather than the proposed 0.50 percent for improving competitiveness of the local industries.
The BTMA president also demanded that the government increase cash incentives for garment exporters on use of local yarn and raw materials to 10 per cent from the existing 4 per cent for at least the next six months.
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