Business leaders have demanded withdrawal of the proposal to impose 0.2% advance tax (ATA) on the supply of goods to retailers in the proposed national budget.
According to them, as a large number of retailers in the country are still without Tax Identification Number (TIN) and Business Identification Number (BIN), the implementation of this tax will create complications and increase additional pressure on formal sector traders.
Business leaders expressed these views at a dialogue titled 'Tax Fairness in the National Budget' organized by the research organization Center for Policy Dialogue (CPD) in the capital on Thursday. Christian Aid collaborated with the program.
In the dialogue, Kamran T. Rahman said that about 85% of the country's economy depends on the informal sector. Since a large number of retailers do not have TINs, if the 0.2% advance tax is deducted at the time of supply of goods, it will create complications as to whose name it will be deposited. He said that in addition to the existing 1% turnover tax, this new advance tax will impose additional costs on taxpayers in the formal sector.
Mohammad Hatem said that various products and materials are procured from the local market for readymade garment exports. The government collects the tax at the time of export. Even then, if the 0.2% tax imposed on retailers is collected through exporters, they will effectively become tax collectors, which is unacceptable.
He also opposed the proposed tax on subcontracting or contract work. According to him, small entrepreneurs often do sub-contracting work on a limited scale to retain workers. If a tax of 3%-5% is imposed on such work, many will be encouraged to hide information. In this case, he demanded that the tax rate be fixed at 1%.
However, National Board of Revenue (NBR) tax policy member Mutasim Billah Farooqui said that the government's goal is to expand the tax base without increasing pressure on regular taxpayers. For that purpose, product suppliers and retailers are being brought under the tax system. He said that only Tk2 will be deducted in tax for every Tk1,000, through which the aim is not to collect a large amount of revenue; rather, everyone is being brought under the tax system.
Preeti Chakraborty criticized the imposition of tax on non-profit institutions in the dialogue. She said that although the tax rate of medical colleges has been reduced from 15% to 10% in the proposed budget, the tax burden on non-profit institutions has been maintained, which is not fair. These institutions do not even get bank loans.
Snehashish Barua demanded the reinstatement of the 5% slab of personal income tax, saying that it could have brought relief to low and middle-class taxpayers. At the same time, he commented that the increase in corporate tax rate, which effectively becomes higher, could create the risk of capital laundering and obstacles to new investments.
Former NBR chairman Mohammad Abdul Majid suggested organizing regular tax camps or tax fairs at the upazila level to enhance services to taxpayers. On the other hand, Rizwan Rahman said that the proposed budget did not reflect effective initiatives like facilitating credit access for the small and medium enterprises (SME) sector.