The Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) has expressed dissatisfaction over the increase in advance income tax (AIT) from 5% to 20% in the proposed budget for the 2021-2022 fiscal year, fearing disruption in the ease of doing business.
They had earlier proposed removing the existing advance tax in the business community's interest as business operating expenditures increase due to AIT.
Additionally, advance tax (AT) on imports has been reduced from 4% to 3% only, although FBCCI had previously urged to withdraw tax entirely to encourage small entrepreneurs.
In a post-budget press conference on Saturday, the country's apex trade body expressed satisfaction over the budget proposals in general, extending gratitude to the government for formulating a business-and investment-friendly budget.
The federation applauded some initiatives proposed in the budget, including a focus on skills development, tax cut facility for companies with 10% of employees from the third gender community, and others.
FBCCI also appreciated the government's decision of expanding the social safety net to deal with increasing unemployment and income cut due to the Covid-19 pandemic and gearing up other ongoing safety measures and expressed hope that these will contribute a lot to the economic recovery.
However, FBCCI recommended reviewing the revocation of tax waiver privilege on software and IT facility sales added in the new budget to enable the IT sector to flourish.
Additionally, it urged to keep all e-commerce services out of the source tax net for at least one year to encourage small entrepreneurs.
The federation also asked for withdrawing the 15% tax imposed on private universities, medical colleges, dental colleges, and engineering colleges, citing that the education system has already been significantly affected by the Covid-19 pandemic.
Furthermore, the association urged the government to facilitate the import of river dredging machinery with a tax of 1% to increase navigability in the rivers and expedite implementation of the Delta Plan.
Regarding meeting the budget deficit, FBCCI urged the government to meet the obligation from foreign sources instead of taking out loans from local banks.
The proposed budget deficit is around Tk2.14 lakh crore, which is 6.2% of the GDP. Of the total amount, the government will arrange Tk1.13 lakh crore from internal sources – Tk76,000 crore from the bank system and Tk32,000 crore from savings certificates.
In the proposed budget, the government reduced the rate of business turnover tax for individual taxpayers from 0.50% to 0.25%. FBCCI urged the government to make the rate effective for all businesses.
Finance Minister AHM Mustafa Kamal, at a post-budget press briefing on Friday, said the government would consider offering more tax breaks to businesses for the next fiscal budget to create employment opportunities by boosting investment and production in the private sector.