• Friday, Jan 24, 2020
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Parliament passes Finance Bill with changes to some proposals

  • Published at 09:24 pm June 29th, 2019
File photo of an ongoing session inside the Bangladesh Parliament Syed Zakir Hossain/Dhaka Tribune

For the first time in Bangladesh's history, Prime Minister Sheikh Hasina moved the Bill following a request from Finance Minister AHM Mustafa Kamal

Parliament on Saturday passed the Finance Bill 2019 with some changes in the proposals over the capital market, VAT, and the handloom industry.

For the first time in Bangladesh's history, Prime Minister Sheikh Hasina moved the Bill following a request from Finance Minister AHM Mustafa Kamal, reports UNB.

The finance minister made the request, as he was unable to move it due to his illness.

Taking part in the general discussion on the proposed budget, the prime minister said, the government has fixed 2030 for achieving the sustainable development goals (SDGs), and 2041 to make the country a developed one. "For this, and implementing our election manifesto, this pro-people, pro-development, and balanced budget will act as an effective tool," she said.

For a prosperous economy, she said, it is necessary to have a prosperous capital market. "This budget has many incentives for the capital market, and the implementation of these incentives will expand the market, and help it play its desired role."

"To protect the interests of small investors, the budget proposed imposing 15% tax on stock dividend distributed to shareholders by any listed company. But some of the business community raised objection to this. This will raise their cost of capital, and financial expenses, and they'll be discouraged to invest," Sheikh Hasina said.

She said, banks and financial institutions had informed that as per the demand of Bangladesh Bank, the listed companies cannot give cash dividend due to increase in the paid-up capital.

In this context, the prime minister proposed that listed companies give the same percentage of cash and stock dividend. "If the percentage of the stock dividend remains higher than 10 percent, tax will be imposed on the declared stock dividend."

In the proposed budget, she said, the government has imposed 15% tax for a company if its retained earnings, and reserve exceed 50% of its paid-up capital.

"But the businesses raised their objection saying accumulated profit is usually invested in companies, its expansion and development while capital is needed for the expansion and reform of the local, and foreign companies," she said.

But she said, paying profits to investors has to be in their mind.

The prime minister said listed companies can transfer a maximum 70% of the net profit after tax for retained earnings, and reserve. "A company has to give the rest of 30% as stock, and cash dividends. If any company fails to do so, 10% tax will be imposed on the transferred retained earnings, and reserve."

She said, businessmen providing VAT at lower than 15% rate will be able to claim rebate, which was not proposed in the original budget placed in Parliament on June 13.

In the budget, the government proposes imposition of 5%, 7.5%, and 10% VAT on specific goods and services apart from the standard VAT rate of 15%. In addition, it wants to impose specific taxes on some services and products, such as key construction materials like rod and newsprint. It has also suggested continuing the existing 2% and 2.4% VAT at the trading stage of petroleum, and pharmaceuticals.

It also said, business people will not be able to avail themselves of input tax credit if they pay less than 15% VAT.

To protect the local handloom industry, the Prime Minister proposed imposing Tk4 as VAT on per kilogram of thread, which was 5% in the proposed budget.

She also said, the government will bring logical changes to import duties on papers that are not produced in the country.

Sheikh Hasina said everyone will be benefited by the budget. "This budget will help us to go forward, keeping the pace of ongoing development towards building a happy, developed, and prosperous country."

She also said the government has attained the upgrading of Bangladesh into a middle-income country by successfully implementing the 'Vision 2021', and it is heading forward to achieve the SDGs by 2030, and build a developed country by 2041.

Finance Minister AHM Mustafa Kamal in his winding-up speech said, "We'll definitely reach the double digit GDP growth by 2024, and will attain 10% growth every subsequent year."

"We all, under the leadership of Prime Minister Sheikh Hasina, have relentlessly been working to take the country to a position from where no nation will be able to derail our development trend."

He said Bangladesh will reach a position by 2030, when it will not take foreign debt, and rather provide debt to others.

At the outset of his speech, the finance minister said he was caught by dengue on June 10, and described the difficulties he faced while placing the proposed budget to the Parliament on July 13.

Opposition bench members Fakhrul Imam, Pir Fazlur Rahman, Kazi Firoze Rashid, Begum Rawshan Ara Mannan, M Rustam Ali Farazi, Mokabbir Khan, and Rumin Farhana proposed publishing the Finance Bill for eliciting public opinions.

In response, the prime minister hinted that the BNP had deposited money in Swiss Banks, which it amassed through nomination business in the December 30, 2018 national election. "We have information that BNP gave nomination to 692 candidates in 300 seats in the 2018 election. More than two or three candidates were given nomination in each constituency. Where did they deposit that money gotten from nomination business? You will get the idea from statistics of Swiss Bank accounts if you look into the matter," she said.

Speaking on her proposal, BNP MP Rumeen Farhana said, the proposed budget is not a pro-people one as it is aimed at making rich people richer, and the poor people poorer.

She also mentioned that Swiss Bank deposits by Bangladeshis have increased a lot in recent times.

Pointing to the MPs' criticism over the government's failure to reign in the loan default culture, Sheikh Hasina said, it was military dictator Ziaur Rahman who grabbed the state power, and introduced military rule in the country, and started the loan default culture.

She said the loan default culture would have stopped had the democratic government remained in power. "We have already taken some measures, and are also taking steps to stop it," she added.

On the budget proposal of giving scope to whiten black money, Sheikh Hasina said, her government will certainly take measures if there is a rise in corruption practices following the scope.

Later, the bill was passed by voice vote.

The bill was introduced in the House on June 13.

The House accepted some amendments of the Finance Bill, 2019 brought by M Shahiduzzaman Sarkar, Mujibul Huq, Pir Fazlur Rahman, Moshiur Rahman Ranga, Shahiduzzaman Sarkar, Abdus Shahid, Israfil Alam, Kazi Firoze Rashid, Harunur Rashid, M Rustam Ali farazi, and Begum Rawshan Ara Mannan. These amendments mainly involved clerical errors.

Later, the proposals for publishing the bill for eliciting public opinions, and amendments were rejected by a voice vote.