NBR not to withdraw tax exemptions soon
Highlights:
- Tax exemptions will be reduced step by step so that the industries are not harmed by it
- Tax exemptions in the country amounts to about Tk2.5 lakh crores per year, according to an estimation
- Most of the tax exemptions are provided on the basis of political considerations, said sources
The National Board of Revenue (NBR) does not intend to completely withdraw the tax exemptions soon. Rather, the authorities plan to continue the work of rationalising it gradually, said the NBR chairman.
"Tax exemptions cannot be cancelled all at once. Rather, the work to rationalise it is going on, which is a continuous process," said NBR Chairman Abu Hena Md Rahmatul Muneem at a press conference Thursday on the National VAT Day.
When the International Monetary Fund (IMF) gave initial approval for a $4.5 billion loan to Bangladesh last month, it made several recommendations regarding the overall management reform of the NBR including drastically reducing tax exemptions, said relevant sources.
Responding to a question on NBR's stance on the issue, Rahmatul Muneem said tax exemptions will be reduced step by step so that the industries are not harmed by it.
In order to speed up industrialisation in the country, to promote local industries and to control the cost of large projects, the government has been giving tax exemptions on the import of various materials. Besides, there are tax exemptions on a number of essential products and services to keep them within the purchasing power of people.
There are no specific statistics on the financial value of such tax exemptions in the country. However, former chairman of NBR Dr Md Nasiruddin Ahmed said in a meeting organised by the Economic Reporters Forum last November that tax exemptions including income tax, VAT and customs duty in the country amounts to about Tk2.5 lakh crore per year, most of which are provided on the basis of political considerations.
At the same event, MA Razzaque, chairman of the Research and Policy Integration for Development, said if the tax exemptions are removed, the country's tax-to-GDP ratio will increase by two percentage points. Currently, Bangladesh's GDP at constant prices is Tk30.39 lakh crore. Taking that into account, the amount of income tax exemption alone is about Tk61,000 crore.
According to sources at the NBR, there is a plan to include a statement regarding the financial value of the tax exemption in the budget for the FY24.
The NBR chairman yesterday said, "Challenges may emerge in case of revenue collection due to national and international reasons, but we are ready to overcome it. The NBR is well prepared to face the challenges. We will try to continue the growth rate (of revenue) despite the challenges.
"Challenges regarding revenue collection have arisen due to global recession and geopolitical factors, but we successfully tackled it. Challenges also arose during the Covid-19 pandemic and the Russia-Ukraine war, but we have faced them."
In yesterday's press conference, the NBR chairman highlighted their plans on the occasion of VAT Day on Saturday. This year's theme for the VAT Day is "VAT Policy for Development, Build the Nation with VAT".
On the occasion of VAT Day, nine top VAT-paying companies will be formally honoured at the Hotel Intercontinental in the capital.
Besides, on the occasion of VAT Week from 10-15 December, the NBR will organise discussions on the pros and cons of VAT and required measures, raise awareness about VAT by setting up stalls at various places, provide assistance for VAT registration and encourage businesses for online VAT payment.
