Reducing corporate tax rates in the proposed national budget for 2022-23 will encourage investment, increase employment, help achieve growth and expand export diversification.
However, it is necessary to increase the personal tax-free income limit in proportion to the 5.6% inflation, reads a press release issued by the Chittagong Chamber of Commerce and Industry (CCCI) in response to the proposed budget.
CCCI President Mahbubul Alam said the budget was timely considering the post-epidemic economic recovery process and the wartime situation in the global context.
CCCI said that to meet the budget deficit, loans will be taken from domestic and foreign sources. Tk73,175 crore will be spent on interest on the internal debt which may put pressure on the government to implement the budget. The government should be aware of the growing debt burden to address the deficit, he added.
The budget includes tax cuts for publicly traded, non-publicly traded companies, and one-person companies, which will encourage investment growth and help create jobs, he said further.
The CCCI president said the source tax on the supply of trading goods has been reduced which is positive. The source tax has also been reduced on the supply of raw materials to the manufacturers which will play an important role in reducing the prices of locally produced products.
In the case of deduction of VAT at source, the period of acceptance of reduction adjustment by the supplier has been increased from two tax periods to four tax periods, which is positive. To encourage the movement of domestic flag vessels, tax exemption has been given till 2030 which will give hope for new investment in this sector, the business leader added.
In addition, the penalty for non-submission of VAT or turnover tax return on the due date has been reduced from Tk10,000 to Tk5,000 and in case of failure or irregularity, a fine equal to half of the revenue has been proposed, which is business-friendly.
Reducing the tax rate on imports of HR coils and other raw materials used in the production of steel products from 5% to 3%, and abolishing the advance tax on gold imports will reduce the value of these products.
However, the tax rate at the source of bank interest has been increased from 10% to 20% for the company taxpayer and the tax at the source of exported goods has been increased from 0.5% to 1%, which may be reconsidered.
The imposition of the same tax rate on all other export-oriented industries like the garment industry will play an important role in diversifying export products.
CCCI President said that the removal of the obligation to transact in the banking channel against the supply in the same proprietary organisation and to give discounts even in the case of mobile banking transactions would facilitate business activities.
If this budget is implemented, it will be possible to increase the desired development and internal capacity in the current global context.