"It will take two to three years for the economy to heal. So the imposition of extra taxes will put more pressure on the businessmen and hurt the country's economic recovery”
Business leaders have met the NBR boss and discussed several tax proposals in the new budget for the sake of "removing inconsistencies" in the current difficult business climate.
They said it would be very difficult to run businesses if the various proposed tax measures and other enforcement measures were not modified or amended.
In an online meeting with the National Board of Revenue (NBR) Chairman Abu Hena Md Rahmatul Munim on Wednesday, June 24, the business leaders raised these issues and recommended changes before the budget is passed on June 30.
Among the objections they raised were the issues of not lowering the turnover tax rate for the small and medium-sized enterprises (SMEs), doubling the source tax for the exporters, and maintaining the 15% VAT rate for land registration of economic zones.
They also objected to the proposed penalty for failing to release goods from the port within five working days and the mandatory deposit of 20% of the amount of VAT evasion claims before filing an appeal calling it unjustified and wanted the reinstatement of the previous rate of 10%.
The meeting was attended by Private Industry and Investment Adviser to the Prime Minister and Member of the Parliament Salman F Rahman, former president of the Federation of Bangladesh Chambers of Commerce and Industry Md Shafiul Islam Mohiuddin, and the Metropolitan Chamber of Commerce and Industry President Nihad Kabir.
The business leaders also objected to the proposed empowering of non-cadre superintendents to conduct drives at any office and factory to prevent VAT evasion. They have been empowered to confiscate files and impose fines if they find any irregularities from the next fiscal year.
Currently, assistant tax commissioners were empowered to conduct such drives.
They business leaders recommended lowering source tax on export, exemption of 15% VAT on land registration for economic zones, and a cut in corporate tax for listed companies in line with non-listed companies, it has been learned.
The budget has proposed to reduce the corporate tax rate for non-listed companies from 35% to 32%. They recommended a similar cut for listed companies, saying that such discrimination is not desirable at a time when the government is encouraging good companies to be listed on the capital market.
They proposed raising tariffs on tobacco, beverages and alcohol.
When asked, FBCCI former president Shafiul Islam Mohiuddin told Business Standard that there are some inconsistencies in the proposed budget. "To solve them, we have had an informal discussion. The NBR chairman also agreed with us in principle on some issues."
Shafiul said the business climate is already poor amid the Covid-19 crisis.
"Even if the pandemic abates in six months, it will take two to three years for the economy to heal. So the imposition of extra taxes will put more pressure on the businessmen and will also hurt the country's economic recovery, he said."
The business leaders have also opposed the provision of submitting separate VAT returns for each product of a company that markets more than one product. The business people said this would create extra burden for pharmaceutical companies.
As a company pays VAT on all the products they make, the businessmen have suggested the cancellation of the provision of filing separate returns for each product.
About the proposal of imposing fines of Tk50,000 if goods were not released from the port within five working days of import, the businesspeople said that Covid-19 has interrupted the regular transportation of goods and the factories are not running in full swing either, so it will be very difficult for the businesses to follow such a provision.
Regarding the appeal for VAT evasion cases, now an appeal for revision of VAT claims can be made by paying 10% of the disputed amount. But it has been raised to 20% in the proposed budget.
Traders called the rate unreasonable and they wanted it to be reduced to 10%.
They observed that the SME sector has been severely affected by Covid-19. So the businessmen suggested lowering the turnover tax rate for small entrepreneurs from the existing 4% to 3%.
Urging the withdrawal of 15% VAT for land registration in the economic zones, they said, what the country needs most now is domestic and foreign investments.
If the current rate is maintained, foreign investors will be discouraged in investing here, they pointed out.
Opposing the proposal to raise the source tax on readymade garments to 0.50%, traders said the pandemic has reduced garments exports by one-third.
If the source tax on garments exports is now doubled, the sector will suffer more setbacks, they said while proposing to maintain the previous rate of 0.25%.