The government has slashed corporate tax rates in the proposed budget for the fiscal 2021-22, but some existing provisions such as the Advance Income Tax are not only detrimental towards boosting investments, but unfriendly towards businesses too, said stakeholders.
At a webinar by the Bangladesh German Chamber of Commerce and Industry (BGCCI), they said alongside the income tax cut, the government should also take a few more business and investment friendly steps on issues such as VAT and import duty.
The business leaders however acknowledged that the proposed budget for FY2021-22 will have a positive impact on the sector, while conveying their reaction to the issue at the event titled "Post Budget: Tax & Tariff Implications on Trade and Commerce" on Wednesday.
BGCCI's Executive Adviser and CEO Shahed Akhter presided over the event and Ambassador of Bangladesh Embassy to Germany Md Mosharraf Hossain Bhuiyan participated as the chief guest.
Aside from conveying their thoughts on the proposed budget, business leaders also shared their recommendations. Ahmed Mashuque & Co CEO Mashuque Ahmed and FCA, BGCCI Director Humayun Kabir presented two separate keynotes on income tax, VAT and customs duty.
Kabir said, "The government has slashed the tax rate for listed and non-listed companies by 2.5% in the proposed budget. This move has been lauded by all stakeholders as it is an investment-friendly tax rate.
However, by comparing Bangladesh's corporate tax rate with that of a few other countries, we can see that the average in Bangladesh is higher, his keynote said.
He continued, "Though the government has decreased the income tax rate, businesses still have to pay a 5% tax under the tax deduction at source provision. For this reason, the effective tax rate sometimes reaches up to 58%."
Urging the government to slash the Advance Income Tax, Kabir said, "The multiplier effect of AIT is disappointing the business community. I am also urging the government to withdraw some tax proposals that have a retrospective effect."
Joining the discussion, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan said, "It is very important for the government to focus on long-term policy stability.
"Instead of changing policies on a whim, the government should do it for the long run. This move will help the investors maintain confidence."
Speakers also spoke in favour of decreasing the discretionary power of National Board of Revenue officials, and curbing any possible delays and harassment carried out by the customs department officials, so that imported goods and machinery parts can be received quickly.
At the event, Ambassador of Bangladesh Embassy to Germany Md Mosharraf Hossain Bhuiyan said, "The proposed budget is business-friendly and large industries can now invest in new ventures.
"I am recommending the government and policymakers to further strengthen the social safety net."
BGCCI President Thomas Hoffmann, its Senior Vice President Tarun Patwary, Swiss Bangla Chamber of Commerce & Industry (SBCCI) Vice President Riad Mahmud Prodhani and its Secretary General Saad Omar Fahim spoke at the event among others.