In a post-budget discussion, business leaders have called for the withdrawal of advance tax and reforms of the overall tax system as well as refraining from frequent policy changes in order to boost investment.
"It is long since we have been saying that the government is not benefited by advance income tax and advance VAT. As they only increase the cost of business for traders, we have requested a withdrawal of the measures," said Federation of Bangladesh Chambers of Commerce and Industries President Jasim Uddin at the post-budget dialogue initiated by Chittagong Chamber and Bangladesh Centre of Excellence on Tuesday.
"Since the government refunds the advance tax to us, why is it taken from us in the first place? It is very difficult to get the money back from the National Board of Revenue (NBR) once it is submitted. We think that it is completely illegal to take advance tax in this way, and the measure needs to be withdrawn," he added.
Regarding the recently announced budget, the FBCCI president stated that reducing the corporate tax is a very important step. It was a long-standing demand to reduce corporate taxes, which is the most in this region. At the same time, the budget has given tax exemptions in many sectors to save local industries, which is laudable.
"We have never asked the government to reduce taxes but rather to expand tax coverage by bringing upazila level traders under the tax system," he added.
Although exports and overall business have declined due to the Covid-19 pandemic, business owners have been trying to pay salaries to their staff. Meanwhile, several states in India have recently come forth with ordinances and notifications allowing for exemptions from compliance with certain labour laws to boost the economy amidst the ongoing Covid-19 pandemic, he said further.
He added that the government's incentives for traders in various sectors in the budget have benefited traders a lot. However, many small traders have not got the incentives. Even in this year's budget, there is not much for small traders.
In his welcome address, Chittagong Chamber of Commerce and Industry President Mahbubul Alam said that the government has always been working at the policy level for trade and investment, which he hopes will be reflected in the country's economy.
Rupali Chowdhury, president of the Foreign Investors Chamber of Commerce and Industry, said that there was no provision for paying VAT when entrepreneurs took land in economic zones. Now, NRB has introduced a 15% VAT. As such, there will be no continuity of policy.
He called for maintaining policy continuity, noting that foreign investment in the country is very low compared to competing countries. Calling for doing away with administrative complexity and tax reforms, he said investment will not increase if there were more investment opportunities in neighbouring countries.
Bangladesh Garment Manufacturers and Exporters Association President Farooq Hasan said that the export market for synthetic fibre-based garment products is growing in the world. Entrepreneurs in this sector should be given 10 years' incentive to capture this market. Then, as investment increases, so will employment.
He demanded that business policy support be extended for at least five years without frequent changes.
Alamgir Kabir, president of the Cement Manufacturers Association, said that the advance tax of 2% has been kept as the final liability in the budget, which is a burden for this industry. Again, a fee of Tk500 per tonne of clinker has to be paid. An average of 10-11% import duty is imposed on cement raw materials, which is much higher for industrial raw materials.
This sector has to pay double tax on the same product. Entrepreneurs in this sector will find it difficult to survive if advance tax withdrawal and raw material tariffs are not rationalised, he added.
Asif Ibrahim, president of the Chittagong Stock Exchange, said that the reduction in corporate taxes was positive. However, if the tax gap of unlisted companies is increased more than that of listed companies, many better companies will come to the capital market.
Islami Bank EC Committee Chairman Prof Selim Uddin said that if the revenue collection is low, the pressure to borrow from internal sources will increase.