FE REPORT |
Published: March 04, 2021 7:54:31 AM
| Updated: March 04, 2021 8:06:14 AM
The Dhaka Chamber of Commerce and Industry (DCCI) on Wednesday proposed a gradual reduction in corporate tax rates from the next fiscal year (FY).
According to the plan, the chamber aimed for a cut of 2.5 percent in FY2021-22, followed by 5.0 percent in FY2022-23 and 7.5 percent in FY2023-24.
Lowering the corporate tax rate is necessary to stimulate private investment, DCCI President Rizwan Rahman said as he presented the proposals at a pre-budget meeting held on the premises of the National Board of Revenue (NBR).
He pointed out that the corporate tax rate in Bangladesh is between 32.5 and 45 percent, while the average tax rate is 25.2 percent in India, 29 percent in Pakistan, 28 percent in Sri Lanka, and 20 percent in Vietnam, Indonesia and Myanmar .
He also requested tax breaks for corporate research and development activities, the revision of the minimum tax under Section 82C, the lowering of the tax rate on gross corporate income, and the automation of the income tax and VAT departments.
Mr Rahman also suggested reducing the time it takes to grant VAT rebates to businesses to one month instead of three months and removing the discretion of field level VAT officials among the ranks of deputy commissioners or deputy directors.
He proposed exempting companies that pay VAT at a rate of 15 percent from paying VAT at source.
The DCCI President also proposed exempting input tax (AT) on imports of industrial raw materials and capital machines, as companies have to pay higher costs for the collection of related VAT certificates.
He suggested raising the turnover limit for companies from the current Tk 30 million to Tk 40 million.
Regarding the banking sector, the DCCI president said the excise duty would be imposed twice on companies while receiving credit from banks.
“Companies must first deposit the excise duty on the loan account and later on the loan amount in another account,” he said, calling on the authorities to resolve the problem in the upcoming budget.
In the stock market, Mr. Rahman sought a five-year tax vacation facility to attract investment in greenfield infrastructure projects.
He also called for the VAT exemption to continue for the sale of jute goods on the local market.
The DCCI leader called for incentives for the leather sector to be identical to those for the ready-to-wear sector.
The leather industry, which has a bonded warehouse, has to renew its beefing licenses every two years, while it is three years for the RMG sector, he noted.
There is no separate benefit for the green building certified leather industry, which the RMG sector has enjoyed, he added.
The DCCI President also proposed lowering corporate tax rates for the leather industry, as enjoyed by the RMG industry. He proposed offering tax breaks to green leather companies and allowing them to renew their bond licenses every three years.
In response, the chairman of the NBR, Abu Hena Md Rahmatul Muneem, who chaired the meeting stated that they are developing tax measures that focus not only on generating income but also on creating new sources of income.
“Building trust between companies and tax officials is important in order to simplify the system that doesn’t already exist,” he added.
The NBR Chairman appreciated the DCCI proposals and said there was room to reconsider some tax measures, particularly simplifying the tax payment process.