Foreign investors balk at the idea of investing in Bangladesh due to the higher tax rates here compared to the competing countries, said the Bangladesh Investment Development Authority (BIDA).
To attract foreign direct investments (FDI), BIDA has proposed to lower the tax rate in Bangladesh as compared to the competing countries.
"Corporate tax rate is an important issue in new investment proposals. Before investing in Bangladesh, foreign investors consider the tax rates of neighbouring competing countries. Interested investors refrain from investing in Bangladesh considering the high tax rates here," said Shah Mohammad Mahboob, director general of BIDA, in a pre-budget discussion on Thursday.
"The overall burden of corporate tax rate in the country stands at 40-45% due to other taxes including advance income tax and source tax, while the average global corporate tax rate is 21-24%. It is 20% in Vietnam, 25% in Indonesia and 24% in Malaysia," said the BIDA director general at the meeting held at Revenue Building at Segunbagicha in the capital.
He proposed to reduce the corporate tax rate for non-listed companies from 30% to 28% in the next budget.
BIDA has also called for bringing tech giants, such as Facebook, Google or Amazon, under corporate tax. At present these companies are only paying VAT.
Apart from BIDA, Bangladesh Economic Zones Authority (BEZA), Bangladesh Export Processing Zones Authority (BEPZA), and Business Initiative Leading Development (BUILD) made various proposals at the meeting.
Contradicting the business associations, National Board of Revenue Chairman Abu Hena Md Rahmatul Muneem, who chaired the discussion, said corporate tax is relaxed to a great extent in the country.
Addressing BIDA, BEZA, and BEPZA, he said, "You are all proposing to reduce corporate taxes. I did not expect this from you."
"Sometimes, tax exemptions are given for such a long time that investors' activities often end within that period," he added.
Senior NBR officials were also present in the discussion.