Businesses at a discussion on Tuesday demanded a complete withdrawal of advance income tax (AIT) as it is neither refunded nor adjusted in any cases.
They currently pay 0.5%-10% in AIT on raw material imports. Many of them are supposed to get refunds in the case of no profits, but that does not happen – as manufacturing companies claim.
Moreover, there are a few sectors that are not entitled to refunds even if they suffer losses.
Md Alamgir Kabir, president at Cement Manufacturers Association, said, "We have to pay a 3% AIT and it is considered a final settlement even if we face losses."
He demanded that AIT be reduced as they have no scope to adjust that.
In the face of allegations from a number of business leaders that they do not get tax refund, Md Jashim Uddin, president at the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), questions, "Why are you [the NBR] collecting it [AIT] if it is supposed to be refunded? If you have realised it from taxpayers, why are you not paying it back?"
In response, Abu Hena Md Rahmatul Muneem, chairman at the National Board of Revenue (NBR), asked businesses to communicate with his office if they have refund claims.
The country's apex trade body and the NBR organised the 42nd consultative committee meeting between them on the national budget proposals for the fiscal 2022-23 at a city hotel.
Finance Minister AHM Mustafa Kamal was the chief guest, while Abu Hena Md Rahmatul Muneem chaired the event. FBCCI President Md Jashim Uddin moderated it.
Adib H Khan, chairman at Tariff and Taxation Sub-Committee of Metropolitan Chamber of Commerce and Industry, said, "The overall tax burden stands at 45%-50% owing to non-refund of AIT."
Matiur Rahman, president at Bangladesh Motorcycle Assemblers and Manufacturers Association, also requested that AIT rate for motorcycle manufacturers be reduced as it is considered as the final settlement.
"Otherwise, we should be given a refund," he added. The motorcycle sector pays a 5% AIT on raw material imports.
He also said the motorcycle manufacturers are facing high duty at the import stage due to the currency exchange rate.
Allegations of harassment in VAT registration
Narsingdi Chamber of Commerce and Industry (NCCI) President Md Ali Hossain Shishir alleged that businesses are not willing to get registered for VAT because of harassment by local VAT officials.
The number of VAT registered businesses in Narsingdi has increased to 2,000 from only 200 after the enforcement of the new VAT law.
But currently, the businesses are reluctant to obtain VAT registration certificates fearing harassment, he claimed.
Kishoreganj Chamber of Commerce and Industry President Mujibur Rahman Belal also alleged that officials demand Tk3,000 for VAT registration.
Bangladesh Restaurant Owners Association president Imran Hassan said this sector was the worst victim of the pandemic.
Demanding VAT withdrawal from this sector, he said this sector contributes only 0.23% to the total VAT collection, but they have to go through serious harassment.
Md Helal Uddin, president of Bangladesh Shop Owners Association, said, "Even small shops have to register for VAT. If they do not submit VAT returns, they have to pay a fine of Tk10,000. Such harassment should be stopped."
On allegations of bribery and corruption, NBR chairman Abu Hena Md Rahmatul Munim said, "I am deeply saddened when the NBR is discredited for a few misguided customs officials and businessmen. We want friendship and trust between us. Problems need to be solved through cooperation, not criticism."
He also said all those will be resolved when VAT collection goes into complete automation, adding that the NBR is committed to providing better service through automation.
Next budget's theme a win-win for all: Finance minister
Finance Minister AHM Mustafa Kamal said the next budget's main theme will be "a win-win situation for everyone".
He further explained, "Both the government and businessmen will benefit in the next budget. None will be the losers. If the businessmen win, the government will win."
"We do not want to hear allegations that you [businessmen] are not getting anything. You have to make more sacrifices. Our revenue generation has been boosted more by handing your hands," he noted.
The minister said the tax GDP ratio has increased to 10.3% from 9.1%.
He requested businessmen to share their discomforts to make the next budget pragmatic and reduce businessmen suffering maintaining revenue collection growth in the line of the country's development growth.
"You have to pay taxes. How will the Padma bridge be built if you do not pay tax? How will the megaprojects end?" said AHM Mustafa Kamal.
The finance minister noted that the revenue generation has increased eight times to 2,59,000 crore.
"You [businessmen] all have contributions behind this growth and NBR officials have done hard work," he added.
However, the business persons also need to keep in mind that they will have to pay taxes in the future as well, he said.
Mustafa Kamal said the country's taxation policy will be appreciated globally as the government wants to impose direct tax more to give some relief to poor people from the tax burden.
In response to allegations that tax and customs officials take bribes, the finance minister questioned why the businessmen are paying bribes.
Requesting all not to pay bribes, he said, "I have talked with the NBR Chairman about this issue. Why are you bribing them? It is our misfortune."
The minister also remarked that those who pay bribes will have their place in hell.