Chambers’ and trade associations’ leaders have strongly opposed a budgetary move to increase tax on trade licence renewal, saying the proposed fiscal measure is contrary to the government’s plan for improving the ease of doing business index.
The Finance Bill, 2019 proposed increasing the withholding tax to Tk3,000 from the existing Tk500 for traders in Dhaka and Chittagong city corporations.
The tax rate for traders under other city corporations has been increased to Tk2,000 from the existing Tk300.
For traders at municipality in district headquarters, the tax has been proposed at Tk1,000.
“The policy is totally ill-judged,” says Shafiul Islam Mohiuddin, former president of Federation of Bangladesh Chambers of Commerce and Industries (FBCCI), adding that the NBR is not on right track.
He believes that the decision of tax increase will discourage entrepreneurs, particularly the start-ups, denting their confidence and inspiration to carry on business.
Entrepreneurs or traders start their business with getting a trade licence and if they face such an abnormality in the beginning, how they will run the business, Mohiuddin asks.
President of Small and Medium Enterprises Owners’ Association of Bangladesh Md Ali Zaman finds the proposal of tax increase on trade licence very frustrating for small businesses.
The proposed hike in tax will definitely place the SMEs in tough situation, he asserts.
“The budget proposed the increase in a moment when we are demanding cost minimization in doing business, including reduced tax for obtaining trade licence,” Zaman mentions.
“The authorities are not listening to us at all,” he laments.
He, however, says the increase in tax will increase the overall business cost, while traders have to pay informal or speed money for getting such licences.
Zaman says currently Tk3,000 to Tk25,000 is needed for obtaining a trade licence depending on categories of business. If any extra tax is increased in the budget, the total cost of business will rise further, he adds.
“The proposed tax hike will hurt women entrepreneurs badly as most of the women involved in the SMEs have low capital base,” says Mousumi Islam, president of the Association of Grassroots Women, adding that women entrepreneurs will have to struggle to run their businesses.
Abu Naser Khan, manager (policy) of SME Foundation, says the decision of tax increase will go against the goal of the government in improving doing business situation and ease of doing business index.
