The Dhaka Chamber of Commerce and Industry (DCCI) has demanded a 5% cut in corporate tax in order to reach the 8% GDP growth required to gain middle income country status.
The trade body also urged the government to launch a pilot survey to identify taxable people so the tax net can be expanded in both rural and urban areas to increase government revenues. DCCI President Abul Kasem Khan submitted the budget recommendations for fiscal year 2018-19 to National Board of Revenue (NB) Chairman, Md Mosharraf Hossain Bhuiyan, at a pre-budget meeting on Tuesday.
“Bangladesh has to maintain its human index, per capita income, and reduce economic vulnerability to improve its economic stability as a developing country. The GDP growth has to increase to 8% to graduate into a middle income country,” Abul Kasem Khan said in the budget proposal.
“In achieving the goal, we need an investment friendly revenue management system in the next budget that will empower the individual as well as entrepreneurs who invest in the country,” he added.
The DCCI president also urged the government to offer tax rebates for productive sectors and a progressive tax policy which will attract investment.
He proposed reducing corporate tax by 5% for fiscal year 2018-19 for all categories of businesses, as well as as a 7% cut in FY2020-21 and 10% in FY2021-22.
In addition, the DCCI proposal recommended increasing the tax free income limit to Tk3 lakh from the existing Tk2.5 lakh.
It further asked the government to introduce several categories of tax cards, instead of having a single one based on the contribution of the tax payer to the government exchequer.
Moreover, DCCI President Abul suggested that tax payers be recognized, such as by receiving facilities at hospitals and airports.
To encourage research and development and activities related to the Sustainable Development Goals (SDGs), the DCCI urged the government to offer tax rebates on 5% investment of a company’s income.
The chamber also asked the government to introduce tax exemptions on purchases of electronics such as smartphones, laptops, and tablets up to Tk25,000 to promote the vision of a Digital Bangladesh.
It also called for tax exemptions on children’s education up to Tk1.2 lakh.
In response to the DCCI proposal, NBR Chairman Mosharraf Hossain Bhuiyan said the government was thinking about how to increase revenues while reducing taxes, as a significant number of people had demanded cuts on the corporate tax.
Regarding Value Added Tax (VAT), Mosharraf said there was a tendency to evade VAT and it needed to be collected properly so people become accustomed to the system.
The NBR chairman also admired the proposal for tax exemptions on the expenses for research, innovation, and SDG related activities, assuring that it would be considered. However, he denied the tax free purchase of electronic devices up to Tk25,000.
Stressing on investment, DCCI President Abul claimed Bangladesh was still in the 1990s in terms of infrastructure in 2018.
The NBR chairman denied the allegation, saying infrastructure had improved significantly in recent times, particularly in terms of electricity and transportation.