DCCI demands tax exemption for start-ups for 3 years
The Dhaka Chamber of Commerce and Industry (DCCI) yesterday urged the government to exempt new entrepreneurs from taxation for at least the first three years of operation, to encourage them to set up businesses and create jobs.
"It is not possible for start-ups to make profits within 3-4 years of operation," said Sabur Khan, president of DCCI, adding that the chamber took up the issue as the country has long not fared particularly well in encouraging entrepreneurship.
About 72 percent of the youth population think that they would fail if they set up businesses, according to the UK-based Entrepreneurship Research Association.
The DCCI emphasised widening the tax network, instead of raising tax rates, as taxes cannot be increased after a certain level.
"There is no alternative to widening the tax network for increasing revenue," Khan said.
The chamber said it is frustrating that only 1.4 million people in a country of 160 million pay taxes.
Khan's recommendations came at a pre-budget meeting at the National Board of Revenue.
The chamber also called for piling on the import duties for finished products that are also produced within the country to protect local industries, which are struggling due to disruption in gas and electricity supply.
It, however, categorically opposed any duty or tax on industrial raw material imports.
The chamber said the huge amount of money that the government collects as taxes every year could be re-distributed as low-interest loans among businesses, as the current lending rates are not at all conducive for investment.
Subsequently, banks' lending rate would come down to single digit, which has been hovering around 18 percent for a couple of years.
The chamber said the tax-free income ceiling for individuals should be raised to at least Tk 3 lakh from the existing Tk 2 lakh, as the living costs have shot up amid the stubbornly high inflation.
Furthermore, the ceiling for women and elderly citizens should be increased to Tk 3.5 lakh from Tk 2.5 lakh and for the physically and mentally challenged to Tk 3.75 lakh from Tk 2.75 lakh.
The existing 10 percent surcharge on properties worth more than Tk 2 crore is “too high”, the chamber said, adding it should be 5 percent, and the limit should be raised to Tk 5 crore.
The DCCI said the corporate tax on over 500 listed companies should be brought down to 15 percent from the current 27.50 percent.
At the same time, other benefits should be increased to encourage others to go public, which will discourage tax evasion and further government's revenue base.
The chamber urged the government to bring down the advance income tax at sources to 3 percent from 5 percent, with the companies extending the highest amount of AIT honoured.
The tax on opening local letters of credit should also be withdrawn so that businessmen can make transactions through proper channels, the DCCI said.
Khan also opposed the issuance of any statutory regulatory order on duties and taxes in the middle of any fiscal year, which he said, disrupts industrialisation and hurts consumers.
The chamber said the tax-free turnover limit for small businesses and industries should be raised to Tk 1 crore from Tk 70 lakh and the rate fixed at a reasonable 2 percent.
It said the present 26.67 percent value addition, the basis for 4 percent value-added tax (VAT), is “not realistic”.
The value addition should be 10 to 12 percent and on that basis, the VAT should be 2.5 percent.
The chamber also recommended the government to withdraw advance VAT at the import stage and 4 percent VAT on raw material supplies for local industries.
The DCCI also said the 9 percent VAT on commercial buildings on rent should also go.
Comments