The Institute of Chartered Accountants of Bangladesh (ICAB), the Institute of Cost and Management Accountants of Bangladesh (ICMAB) and the Institute of Chartered Secretaries of Bangladesh (ICSB) have submitted their proposals for the 2021-22 fiscal year national budget. The proposals all focus on a more investment-friendly tax and value-added tax (VAT) structure.
In their meeting with National Board of Revenue (NBR) Chairman Abu Hena Md Rahmatul Muneem, representatives of the three professional bodies of accountants and chartered secretaries highlighted the importance of the necessary changes.
ICAB and ICSB proposed a corporate tax cut, citing that Bangladesh taxes corporations more than its peer's economies.
Currently, other than financial services, telecommunication and tobacco companies, listed firms pay a 25% tax on their annual profits, while non-listed firms pay a 32.5% tax.
Of the neighbouring countries, the tax rate is 20% in Thailand, 22% in Indonesia and 25-30% in India.
ICAB proposed a 2.5 percentage point cut in corporate taxes just for companies who pay 25% and 32.5% taxes now. ICSB, meanwhile, proposed a 20% corporate tax for the same listed companies.
ICAB proposed to halve the tax on dividend income to 10% so that it inspires investment and employment.
ICMAB proposed to consider the existing 20% dividend tax an ultimate tax liability, as currently it becomes double taxation when a taxpayer does not get an income tax rebate against the source tax deducted by dividend-paying companies.
ICSB proposed a 10% corporate tax rebate for a listed company that pays a more than 30% cash dividend. It also requested that NBR not charge a tax on holding companies' dividend income from their listed subsidiaries.
A holding company fully or partially owns another company and if it owns at least half of the shares, the second company is called the subsidiary of the holding company.
ICMAB demanded the clear announcement of a 5% tax on non-resident investors' capital gain from Bangladeshi listed companies, which would increase foreign investment in local bourses.
Currently, investors are confused about whether they have to pay the 15% capital gain tax which is grossly applicable in Bangladesh.
ICAB, in separate points, requested that steps be taken against the illegal employment of foreigners in Bangladesh alongside the taxation of all foreign companies that are operating in the country through branches, project or liaison offices that have yet to be under the tax net.
Both ICAB and ICMAB proposed a wide range of changes to the VAT law for a business-friendly taxation system.
ICMAB suggested making cost statements accompanied by quantitative analysis statements, signed by cost and management accountants, mandatory, while companies submit their income tax returns.
This would enable the cross-checking of costs expressed in audited financial statements of a taxpayer entity, according to the cost and management accountants.
All three bodies have submitted specific proposals to allow their fellow members to play a role in tax-related services.
ICSB recommended allowing its members to practice as income tax lawyers, while ICMAB requested that its members be included alongside ICAB members and lawyers as eligible VAT assistants for companies when they face a VAT dispute.