FY24 Budget: Businesses call for gradual retraction of tax exemption

FY24 Budget

Businesses yesterday urged the government not to withdraw the tax exemption facility from all sectors in one go in the upcoming budget as it would be too big a knock for them to steer.

The request came at Finance Minister AHM Mustafa Kamal's pre-budget meeting with the leaders of different business chambers and trade bodies.

Bringing down the tax exemption facility, which includes complete relief from taxes, reduced rates or tax on only a portion of items, is one of the conditions agreed upon with the International Monetary Fund for the $4.7 billion loan.

Before deciding to withdraw tax exemptions, the government should consider the economic importance and impacts of the exemption on the sectors that have been enjoying the facility, said Md. Jashim Uddin, president of the Federation of Bangladesh Chambers of Commerce and Industry, at the virtual discussion.

Rather, it is possible to increase the revenue collection manifold without withdrawing the facility if the National Board of Revenue (NBR) applies its existing rules and modernises its management, he said.

He also suggested the government expand the tax net rather than increase the tax rate for increasing the revenue collection in the next budget.

The FBCCI also demanded the government brings down the source tax on export receipts to 0.25 percent from the existing 1 percent.

The government should also expand the online services of a national single window to expedite tax payment and the release of goods.

Modernisation and amendment of the customs act, value-added tax (VAT) law and income tax ordinance are needed along the lines of the World Trade Organisation's agreement on trade facilitation.

The decision should be taken in consultation with the stakeholders concerned to make those laws to the global standards, Jashim Uddin added.

The businesses also requested the government to impose duty and tax on the release of exported and imported goods following the best standards of the WTO and World Customs Organisation.

The businesses demanded the government for supplying tax-free subsidised electricity, water and gas to facilitate productivity and export of goods.

The FBCCI demanded equalising the facility in payment of duty and taxes for both domestic and international investment.

The income tax net needs to be expanded and the establishment of income tax offices at the upazila level is needed for increasing the revenue collection, Jashim Uddin added.

Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association, demanded the government brings down the tax on cash subsidy received on export earnings to 5 percent from 10 percent in fiscal 2023-24.

He also demanded simplification of the procedures for tax refund and subsidy payment as the current process is time-consuming and leads to harassment.

All kinds of taxes should be withdrawn from the earnings of sub-contractors as such businesses get lesser profits and take on more risks, Hatem said.


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