The private sector, the engine of the country's economic growth, seems to have got a fair focus in the proposed budget for the fiscal 2021-22.
A cut in corporate tax by 250 basis points for companies, except financial services, telecom operators and tobacco companies, is lauded by businessmen.
"We have been demanding tax rationalisation for a long time and this will energize economic activities in the private sector," said Rizwan Rahman, president of the Dhaka Chamber of Commerce and Industry (DCCI).
"But, it [corporate tax] needs to be much lowered gradually to competitively attract investments and give our private sector a big boost," he said.
He lauded the incentives for the "Made in Bangladesh" campaign, which warmly welcomes next level industries through up to decade-long tax holidays for local manufacturing of automobiles, electronic appliances, processed foods, industrial machineries and parts, and IT hardware.
The country is spending a lot of its hard-earned foreign currencies to import the products or services it is now looking to produce locally.
To cater to the technologically advanced industries, Bangladesh is going to flourish in, the government also announced tax holiday for educational institutions who would offer diploma degrees and vocational trainings on agriculture, science and IT, along with who will provide professional training in the industries namely automobile, aircraft maintenance, food processing, footwear, glass, mining, mechanical, ship building, leather, refrigeration, ceramics, apparel design, pharmacy, nursing, medical technologies, animal health and production, clothing and garment finishing, and poultry farming.
Mahmudul Hasan Khusru FCA, president of the Institute of Chartered Accountants of Bangladesh, said, "We appreciate the proposed budget that has focused on employment generation through skill development and also the tax exemption for light engineering, agro-based industry and the new concept 'Made in Bangladesh'."
Amid the second wave of the pandemic, the government has proposed extending the similar fiscal support to products and services to fight the virus, while as part of the long-term development plan of private sector healthcare services, the government announced a 10-year tax holiday for big modern hospitals outside Dhaka and Chattogram areas.
Alongside fiscal moves for attracting investments, the government also proposed some relief to the already flourished industries hit by the pandemic.
Reduction of taxes at source during imports of cement industry raw material, and ocean-going vessels might help reduce cost of economic activities and development alongside offering breathing space to the relevant companies.
The DCCI president also requested that advance income tax on export-oriented RMG, jute and jute goods, agro processing and Active Pharma Ingredients raw materials be rationalised.
Also, imported steel industry raw materials are still subject to comparatively higher duties in Bangladesh and the industrial users have been saying that high cost for their raw metals are hindering their international competitiveness.
In terms of VAT, the government supported the same priority sectors either through VAT exemption or reducing the burden a little.
Also, the income tax for mobile financial services has been increased, while one person companies are made subject to 25% income tax, while associations of persons are brought under income tax slab at what companies pay.
The budget will give a moderate boost to the private sector as the government has mainly incentivised many new industries alongside slightly reducing corporate tax for all, while the requests by the most contributing industries have been ignored that deprived them of breathing space in the uncertain business situation, said Mohammad Hatem, vice-president of the Bangladesh Knitwear Manufacturers and Exporters Association.
Duty and tax burdens are real pressure for most industries, he said, adding that the government should give an ear to them.
Meanwhile, American Chamber of Commerce in Bangladesh, in its budget reaction, has called for tax system modernisation, automation, encouraging more digital payments through incentives and building an effective supply chain in Bangladesh.