The ICAB believes the opportunity to whiten black money would bring back some undisclosed money in the mainstream economy
In the proposed budget for the fiscal year 2020-2021, the government has addressed many issues that are likely to improve ease of doing business in the country.
The Institute of Chartered Accountants of Bangladesh (ICAB) made the statement at a post-budget virtual press conference participated by leading chartered accountants of the country yesterday.
Fiscal measures like reduction of corporate tax, lowering of income tax burden on both middle and high-income individuals, slashing of dividend tax on foreign funds and trusts, and reduction of VAT on imports of raw material will help Bangladesh brighten its image among international investors, mentioned the discussants.
In the reaction session moderated by ICAB's former president Humayun Kabir and chaired by its President Muhammad Farooq, the institute also expressed its view on many aspects of the proposed budget.
Although the ICAB expressed it belief, in line with the government's hope, that the proposed opportunity to whiten black money would bring back some undisclosed money in the mainstream economy, the institution called for introducing a structured method to inspire more investment of those undisclosed money in productive sectors like industries for the sake of generating employment.
The institute requested the government to reconsider its plans to impose tax on gratuity schemes which are not approved by the NBR and are concentrated in private sector organisations, impose 2 percent tax deductible at source on local LC transactions for essential commodities, and increase source tax on exports from 0.25 percent to 0.5 percent.
The government has proposed increasing the initial deposit while filing any tax appeal to the appeal commissionerate or to the appellate tribunal from 10 percent to 20 percent of the total amount of disputed tax.
Commenting on this, chartered accountants said if the dispute reaches up to the higher court, effectively a taxpayer has to deposit as high as 60 percent of the total amount which is too high as the refund system is too inconvenient.
Like for non-listed companies, the government may reduce corporate tax for listed companies as well though the leaders of the country's professional accountants believe it needs many other initiatives to attract companies for stock market listing instead of merely widening corporate tax gap for listed and non-listed businesses.
The ICAB has drawn government attention to ensure the utilisation of practicing professional accountants as VAT consultants. The organisation also complained that some multinational consultancy firms are serving a large number of companies in Bangladesh as tax consultants, although this violates the Income Tax Ordinance of 1984 and VAT and Supplementary Duty Act of 2012.
They also requested the government to reduce source tax on professionals' income citing the existing 37 percent rate is too high when compared to those in peer countries.
Like other experts, the chartered accountants also feel the proposed budget is ambitious and has many challenges in terms of its implementation.