MCCI presses corporate tax cuts
Corporate tax rate for non-listed companies should be reduced to 32.5 percent from the existing 42.5 percent, Metropolitan Chamber of Commerce and Industry (MCCI) said yesterday.
Income tax rate for banks, non-bank financial institutions and insurance companies should be set in line with those of other companies, the chamber said in its budget proposal for the next fiscal year.
The MCCI has identified high inflation, low inflow of foreign direct investment, weak infrastructure and severe power shortage as the major challenges for the government to achieve a six percent GDP (gross domestic product) growth targeted for the current year.
“The government should allocate substantial amount of fund for power sector development and set a strong policy support for industrial and agriculture sector development in the coming budget to overcome the challenges."
The chamber recommended a review of tariff anomalies faced by local companies to help improve their competitiveness, saying: “Moderate tax rates and transparent procedures are the gateway to improve tax compliance regime.”
The chamber also suggested the government continue tax holiday scheme for another five years.
It stressed streamlining discriminatory provisions in deduction of tax at source as well as treatment of the withheld tax as final settlement of the tax liability and deduction of tax at source in contract manufacturing.
The MCCI called for a provision for extra depreciation allowance for factories working double shift and triple shift.
Expenses on foreign travels made for the purpose of business should be admissible as deductible expenses without limit, if properly supported by bills and vouchers, the chamber said.
It also said that the allowable limit of perquisites should be increased to Tk 5 lakh from Tk 2 lakh, and the ceiling of tax-free house rent allowance should be re-fixed at 65 percent of basic salary.
The chamber suggested consolidated and simplified VAT (value added tax) laws to enable more efficient implementation of the laws that, it said, will result in less harassment of taxpayers, lower cost of compliance and more efficient revenue collection.
“Currently a manufacturer with distribution activities needs multiple VAT registrations for manufacturing and selling activities, as well as for its separate units. We recommend central registration of VAT with one VAT identification number be restored for manufacturer with selling activities."
The MCCI suggested withdrawal of the current 15 percent VAT on commercial leases.
The chamber said the export-oriented industries, particularly readymade garments, are struggling with reduced price offers from buyers and facing over expending for gas and power shortage, and urged the government to take steps.
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