Foreign Investors' Chamber of Commerce and Industry (FICCI) in a post-budget reaction on Friday said that the GDP growth target of 8.2 percent is achievable, provided that GDP-investment ratio increases to the expected level of 32 percent.
The chamber strongly recommended allowing at least six months for implementation of the new VAT regime. It also called for reducing corporate tax in view of the tax rates prevailing in other countries, which they said, was not considered in the proposed Finance Bill 2019.
FICCI appreciated that the proposed budget retains the feature of continuity, saying it expects the suggested amendments to accelerate investment, improve business environment and socio-economic condition of the country, reports UNB
The chamber said the proposed budget of Tk523,190 crore, which is 18.22 percent higher than that of the revised budget of last fiscal year, is challenging in comparison to 12.60 percent growth in the preceding year. It also expressed concerns over bridging the deficit from banking sources, which may worsen the liquidity situation.
FICCI particularly appreciated notable allocation for human resource development in the proposed budget, and other proposals like fixation of a time-limit for the issuance of certificates by NBR under a double taxation treaty, withdrawal of tax on the dividend received from non-resident Bangladeshi (NRB) companies, increase in the threshold of wealth surcharge, increase of dividend income exemption threshold, withdrawal of the restriction in taking input VAT rebate from certain services, etc.
It said the Finance Act, 2017 had a bold provision for withdrawing withholding tax on the supply of direct materials.
Unfortunately, a new tax has been proposed on direct materials which will be detrimental to industrial growth, said the chamber.
While supporting the vision of digitalization of Bangladesh, the chamber said that increase in supplementary duty (SD), minimum income tax and SIM tax on telecom services contradict that vision.
The title of the schedule of SD on locally manufactured items was "SD at manufacturing stage", which has been changed to "SD at supply stage", it added.
Consequently, the cost of locally-manufactured products will go up significantly and make them less competitive to imported ones, which will discourage local production, FICCI said.
The chamber's proposal for withdrawal of the existing ceiling on head office expense, royalty and technical assistance fees has not been considered. "This will adversely impact the inflow of FDI in Bangladesh."
The account current balance under VAT Act, 1991 will be adjustable under the new VAT law only to the extent of 10% per month. This provision should be withdrawn and the balance be adjusted immediately, said the chamber.