PwC: FY’18 budget not pro-FDI

The proposed budget for Fiscal Year 2017-18 will hit Foreign Direct Investment (FDI) in Bangladesh as there is no new incentive declaration for foreign investors, according to a multinational professional services firm. The post-budget review by PricewaterhouseCoopers Bangladesh (PwC), a subsidiary of the London-based group, said that although the government kept tax-free benefits for local Information Technology Enabled Services (ITES) sectors, the benefit was not offered for non-resident companies. “The budget is local industry friendly, but I cannot term it FDI friendly,” Mamun Rashid, managing partner of PwC Bangladesh, said at a briefing at the group’s Dhaka office on Thursday. He suggested the government incentivise the RMG sector to bring more foreign investment and help it flourish further. The PwC review also highlights some anomalies in the Finance Bill 2017 released on June 1, since conflicts over rationalisation of tariff lines as per HS codes still prevail. It calls for a single-tier tax instead of multi-tier dividend tax for companies under the power sector, and a reconciliation of tariff line. PwC also called upon the government to raise the ceiling of repatriation from the existing 6% on annual turnover, and expressed frustration at the increase in the individual tax burden while corporate tax rates remained unchanged. PwC partner (Tax and Regulatory Services) Sushmita Basu said the finance minister in his budget speech announced that the corporate tax rate would be slashed in future, but there will be no changes in the next fiscal year budget. “The government has formulated the budget, considering long-term benefit,” she added. PwC also recommended strengthening the capacity of Bangladesh Tariff Commission so that NBR and the commission can jointly work for formulation and effective implementation of the country’s national budget. “The FY’18 budget remains almost similar to previous ones since road maps and plans to implement the target in the budget were not made clear,” said Mamun. Other attendees at Thursday’s briefing included PwC Director (Tax and Regulatory Services) Kapil Basu and Manager (Tax and Regulatory Services) Prabir Mitra.