At present, corporate tax is applicable at the rate of 35% for all exporting industries, including SMEs
The SME Foundation has demanded 10-year tax holidays for new entrepreneurs to encourage investments.
Moreover, they also demanded a reduction in corporate tax. At present, corporate tax is applicable at the rate of 35% for all exporting industries including small and medium enterprises (SMEs).
Although there are lower rates on readymade garment exports.
SME Foundation demanded cash incentives at a minimum rate of 20% against the exports as well.
Professor Md Masudur Rahman, chairperson of the SME Foundation, made the recommendations while addressing a virtual press conference on Sunday.
However, SME Foundation has expressed gratitude to the government for accepting 14 SME-friendly proposals in the proposed budget for the 2021-22 fiscal year.
“The foundation will also send more SME-friendly proposals to the National Board of Revenue for consideration before the budget is passed,” he added.
He also said that they will be able to disburse a loan of Tk100 crore to small and medium entrepreneurs within less than two months as part of the government's special incentive package to offset the effects of the coronavirus pandemic.
Mafizur Rahman, managing director of SME Foundation, informed that in order to ensure sustainable development of the SME sector, specific proposals on tax, VAT, tariff and financial incentives were needed in the national budget.
“SME Foundation has submitted a total of 398 proposals to the National Board of Revenue (NBR) and concerned agencies till FY2021-22, and of these, 71 proposals have been adopted by the government or NBR and reflected in the national budgets,” said Rahman.
He also said that as part of the implementation of the Strategic Goal 220.127.116.11 of the SME Policy-2019 to facilitate and rationalize the tax structure, SME Foundation requested to send a proposal for inclusion of SME-friendly proposals in the national budget for the FY2021-22.
“We sent the letters along with various SME associations, trade bodies and in this context more than 100 proposals related to the SME sector were received from 15 associations or trade bodies,” he added.
Subsequently, 68 proposals were finalized through two rationalization meetings with the representatives of SME associations and trade bodies and sent to the NBR and concerned institutions, he added.
A review of the proposed budget for the financial year 2021-22 presented by the finance minister in the national parliament on June 3 reveals that out of the proposals sent by the SME Foundation, 14 have been partially or fully accepted by the government or NBR.
Among the proposals sent by the foundation, reduction of corporate tax, VAT exemption on agricultural processing, tax exemption for agri-machineries manufacturers, tax exemption for light engineering industries, and tax exemption for SMEs run by women who generate less than Tk70 lakh annually were reflected in the proposed budget.
Mafizur Rahman further said that for the development of the SME sector, the government should consider some more issues in the national budget for the fiscal year 2021-22.
SME Foundation demanded the reduction of turnover tax which is 4% on annual turnover of Tk50 lakh to Tk3 crore.
According to SME Foundation, contributing 25% to the country’s GDP, the SME sector employs 20.3 million Bangladeshis — around 20% of the country’s adult population.