'Due to the lack of proper adjustments /refund of AIT, the operating expenses of businesses increase by a large amount'
The Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) on Sunday sought removal of advanced income tax (AIT) and advance tax (AT) from the upcoming national budget for the fiscal year 2021-2022.
The recommendation was made at a virtual meeting between FBCCI and the National Board of Revenue (NBR) as its 41st consultative committee meeting, which discussed FBCCI's proposals for the national budget.
Finance Minister AHM Mustafa Kamal was the chief guest of the meeting, chaired by Abu Hena Md Rahmatul Muneem, senior secretary of Internal Resources Division (IRD) and chairman of NBR, and moderated by Sheikh Fazle Fahim, FBCCI president.
During the meeting, businesspersons and association leaders accorded to the issues posed by AIT and AT on various business variables including those that are imposed on raw materials.
The proposal to eliminate AIT and AT was based over a three-year period, the demand this year is being updated with gradual elimination of the two over a two-year period, Fahim also said.
“Due to the lack of proper adjustments /refund of AIT, the operating expenses of businesses increase by a large amount. The procedural complexities of AIT reimbursement need to be addressed to ensure timeliness,” said Sheikh Fazle Fahim, FBCCI president.
“We hope the next budget will be made aligning the practical execution of Vision 2021, Vision 2041, SDG 2030, the 8th Five-Year-Plan, Covid-19 stimulus package announced by the government, and the ongoing Covid-19 second wave; also in reflection of the of the last fiscal budget,” he also said.
The cash flow in the domestic industry will decrease if AIT and AT is not accommodated, especially with the lockdown brought on by the second wave, Fahim added.
The trade association highlighted that although Bangladesh survived the economic disruption with a 5.24% GDP growth in FY 2019-20, with export earnings standing at $28.94 billion, remittances at $18.7 billion, and foreign currency reserves exceeding $43 billion between July and March of the current fiscal year; the path to economic recovery has just started.
The trade body proposed invoice based bank-to-bank transaction process in every step of business transactions, which would increase government's revenue and the tax-GDP ratio.
It also proposed enlisting alternative industries, product-based diversification and value chain upgrades in new industries- such as food production and processing industries, including ceramic tiles (floorwalls), all types of ceramic tableware and sanitary ware, refrigerators, light engineering, waste management, recycling etc; under the Section 46BB of the Income Tax Ordinance 1984 that grants special incentives.
“We have been working continuously in improving the overall government revenue collection process. Softwares are being developed that will help us to audit businesses more efficiently ensuring accountability. This will help increase the government revenue and help us to accommodate business and corporate favourable tax structure in the coming days,” said Muneem, the NBR chairman.
Mustafa Kamal underscored the importance of the business and industrial sectors, and said: “The recommendations and issues brought forward by the business leaders and the associations will be taken into due consideration to be discussed with relevant bodies."
Among others, Md Muntakim Ashraf, senior vice-president of FBCCI, top FBCCI board members and senior NBR officials were also present.