The government should focus on online systems to widen the tax net to achieve the revenue target set in the proposed budget for fiscal year 2018-19, according to a multinational professional services firm.
The post-budget review by PricewaterhouseCoopers Bangladesh (PwC), a subsidiary of the London-based group, recommended that the government install Electronic Fiscal Device (EFD) to widen the tax net
and as well as remove revenue leakage.
They have also suggested the use of mobile application launched by the National Board of Revenue for Large Taxpayers Unit (LTU) to avail VAT compliance services.
The network came up with the analysis and opinion on the proposed national budget of Bangladesh for the FY19 at a post-budget press briefing – with selected journalists – held at their Dhaka office on Tuesday.
“Many countries have been able to successfully widen the tax net with EFD and mobile application-based systems which helped them boost the revenue,” said Sushmita Basu, partner and leader of PwC.
“Use of IT technology in the tax field – just like mandatory installation of EFD in hotels, restaurants, resorts and shops – would enable real time access to business transactions by NBR to save revenue leakage,” she added.
She further said: “Tax policy reforms should be supported by continued effort, online registration and filing tax returns – to strengthen tax administration and improve tax compliance.”
The organization also said imposition of VAT on the app-based ride sharing services – such as Uber, Pathao and et al – is logical as other virtual businesses would have to follow suit.
Prabir Mitra, manager at PwC, explained that the VAT would be applied on the income by the virtual business organizations and not on drivers, passengers or users.”
“So the claim of rise in fares of app-based transport service is not logical,” he added.
The PwC also highlighted that the budget speech mentioned reduction in corporate tax in the RMG sector, however the same was not done in the finance bill. If the tax rate is further lowered, it would attract more domestic and foreign investment, they said.
The real estate and mobile manufacturing industries would be able to accelerate their businesses as the budget offered them exemption from payment of VAT, according to PwC’s review.
“Exemption of multi-tier dividend taxation for resident companies would benefit many existing companies and encourage investment in the economy,” said Kapil Basu, director of PwC.
Other attendees at the briefing included PwC Bangladesh’s Managing Partner Mamun Rashid, and Assistant Managers Shahadat Hossain and Aminul Islam.