Abu Hena Md Rahmatul Muneem, Chairman of NBR, chaired a pre-budget discussion with a delegation from the Metropolitan Chamber of Commerce and Industry on Tuesday at NBR headquarters in Segunbagicha, Dhaka. MCCI President Nihad Kabir led the delegation. – New Age photo
The metropolis’s Chamber of Commerce and Industry said Tuesday that businesses are not getting the benefits of the reduced corporate tax rate as existing withholding taxes raise the effective tax rate to unusually high levels at various stages.
The MCCI called for withholding taxes to be rationalized in order to lower the effective corporate tax rate. The higher effective tax rate affected both domestic and foreign investment in the country.
The board made the observations during a pre-budget discussion with the National Board of Revenue held at the NBR headquarters in Dhaka.
The government cut the corporate tax rate from 35 percent in fiscal 2020-2021 to 32.5 percent. However, the effective tax rate rose to 50-60 percent of production and on manufactured goods due to withholding taxes at various stages, including the import and middle stages, MCCI President Nihad Kabir said.
She also called on the tax authorities to draft the upcoming state budget for the 2021-2022 fiscal year taking the COVID-19 impact into account, so that business activities can return to pre-COVID levels.
She called on the NBR to gradually lower corporate tax rates as part of preparations for completion of Least Developed Country (LDC) status by 2026.
The chairman of the MCCI subcommittee on taxation, Adeeb H Khan, said it was difficult to say what the corporate tax rate was in the country because the effective tax rate was much higher than what was advertised.
In presenting the MCCI budget proposals, he proposed lowering income tax on imports, supply chain and services.
The MCCI also urged that advertising costs should not be capped as it harms fast moving consumer goods companies (FMCG).
The Chamber also recommended the implementation of the original VAT Act of 2012 as the implemented law, like the old VAT Act of 1991, had become complex.
The new law has limited the scope for input tax discounts and raised the actual VAT rate to over 15 percent.
Early in the morning, the Chamber of Commerce and Industry of Bangladesh, China, at a separate meeting, called for the finance law to be prospective rather than retrospective to allow taxpayers to conduct efficient tax planning.
The government could introduce two-year tax rates in the 2021 Finance Act to ease the bill’s likely effectiveness.
The tax authority should also issue refunds in a timely manner to meet taxpayers’ needs and reduce the tax authority’s nuisance, she added.
The Anti-Tobacco Media Alliance (ATMA) called on the NBR to raise specific taxes and raise the price of all tobacco products, including cigarettes, bidis and smokeless tobacco products, to save lives and increase revenue.
The alliance proposed the introduction of a flat surcharge of 65 percent along with a specific consumption tax, sales tax of 15 percent and a health development surcharge of 1 percent on the final retail price for all types of cigarettes.
Describing the existing structure of tobacco taxation as highly complex and inefficient enough to prevent the use of tobacco products, the ATMA stated that the implementation of the proposed tobacco price and tax measures will prevent premature deaths of around 8 lakh and additional revenue of Tk 3,400 crore would enable revenue.
The Indian-Bangladeshi Chamber of Commerce and Industry applied for additional duty exemptions for essential household products and the guarantee of an appropriate VAT discount.
The WEND (Women Entrepreneurs Network for Development Association) proposed increasing the tax-free ceiling for entrepreneurs.
The Chamber of Commerce and Industry for Women in Bangladesh called for VAT exemption for women entrepreneurs for a period of time to offset losses incurred during the COVID outbreak.
Speaking at the meetings were, among others, NBR Chairman Abu Hena Md Rahmatul Muneem and member Alamgir Hossain, BWCCI President Salima Ahmad and WEND President Nadia Binte Amin.