The Dhaka Chamber of Commerce and Industry (DCCI) has proposed reducing corporate tax by 2.5 percentage points for both listed and non-listed companies to help them enhance competitiveness in the Asian region.
The DCCI placed a set of 40 recommendations for the upcoming national budget for FY23 to the chairman of the National Board of Revenue (NBR) at a pre-budget discussion on Wednesday.
DCCI president Rizwan Rahman also suggested slashing tax on income of corporate dividends to 10% from the existing 20%, which will encourage local investors to re-invest as well as boost efficiency in the stock market.
Besides, he said the tax-free income limit for an individual taxpayer should be increased to Tk4 lakh from the existing Tk3 lakh, considering the increasing inflation and cost of living situation.
About 27 lakh taxpayers on an average regularly submit their returns every year, which is very nominal for an economy like Bangladesh, Rizwan Rahman also said adding that the NBR should take a long-term strategic plan to increase the number of taxpayers up to at least 80 lakh in the next 10 years.
He also underscored the importance of full automation of the overall taxation system.
Currently, businesses that have an annual turnover of Tk3 crore are exempted for VAT. But he recommended increasing this turnover limit to Tk4 crore in the next budget and also requested that turnover tax be imposed based on product's value addition or profit margin.
Rizwan Rahman also suggested minimising the lengthy process of getting a bond licence for the leather goods and footwear industry. Moreover, he suggested giving bond renewal facilities for at least 3 years to these sectors like the RMG sector is currently enjoying.
He also demanded tax exemption on locally-produced machinery and components for electric vehicle charging stations in the country in order to promote a sustainable and environment-friendly automobile industry within the country.
The DCCI president stressed an easy and business friendly taxation system, increasing tax and VAT net, full automation of tax management, product diversification, encouraging local industrialisation and an investment-friendly environment, aiming to attain the goal of economic development.
BCI demands VAT rate at 3%-10%
Participating in the same pre-budget discussion, Bangladesh Chamber of Industries (BCI) demanded that the existing VAT rate be reduced to 3-10%.
BCI President Anwar-ul-Alam Chowdhury (Pervez) said under the current law, 5%-15% in VAT is levied on various purchases, which is much higher for small traders.
"We are demanding that the rate be fixed at 3%- 10% and that we be given the opportunity to avail rebates in all cases," he noted.
Small and medium entrepreneurs have suffered the most in the pandemic time. Almost all new entrepreneurs have lost capital. In this situation, it is necessary to exempt them from taxes even if the NBR counts losses, he also said.
Md Rezaul Karim Reznu, president of Jamalpur Chamber of Commerce and Industry, said a huge amount of working capital gets stuck for paying advance income tax, leading traders to fall into the current asset crisis. So, such tax needs to be withdrawn.
In response to the chamber's discussion, Chairman of NBR Abu Hena Md Rahmatul Muneem said the next budget will be prepared, providing local industries with benefits. At the same time, he advised traders to get out of the idea of getting tax rebates and exemptions and acquire capacity.
The NBR chairman said trade bodies can arrange knowledge sharing activities to make their members aware of various policies that the NBR takes related to revenue and duty structure.
He also said, "Before LDC graduation our private sector has to enhance their capacity because after graduation many facilities that they are enjoying now will not be available then."
To create a business-friendly environment in the country, the NBR is relentlessly working and is simultaneously trying to increase the tax net. In the last two years, the government was more flexible in terms of the tax rate to boost GDP and create employment. This year the budget will be made considering macro policy perspective, he added.