The Small and Medium Enterprise (SME) Foundation demanded a 10 year tax holiday for new entrepreneurs in the SME sector.
They also demanded a reduction of the minimum rate of income tax from 10% to 5% to encourage low-income taxpayers by issuing tax identification cards.
Salah Uddin Mahmud, deputy managing director of the SME Foundation presented these proposals on behalf of the SME Foundation for the budget of the financial year 2022-23 at a meeting chaired by NBR Chairman Abu Hena Muhammad Rahmatul Munimon Monday.
The proposal said that in order to achieve balanced development through economic, social and environmental protection of the country, the government has declared SME enterprises as the main means of industrial development in the National Industrial Policy 2016.
The role of MSMEs is vital to achieving the growth targets set by various national and global policies like National Industrial Policy 2016, SME Policy 2019, Eighth Five-Year Plan, LDC graduation by 2024, SDG in 2030 and Vision 2041.
The SME Foundation also urged to make the tax-free income limit of Tk5 lakh for women and Tk10 lakh for the third gender taxpayers which is currently Tk3 lakh and Tk3.5 lakh respectively.
They also demanded to reduce the dividend of 30% to 15% for the manufacturers of agricultural machinery.
According to the budget proposals, they urged to waive the Tax deducted at source (TDS) in case of the supply of goods as they already pay income tax in advance at the import stage of raw materials used in manufacturing.
They said that the advance income tax deduction has been increased from 5% to 7% for supplying goods produced in the country in the last budget.
They also urged to withdraw this advance income tax deduction.
The SME Foundation demanded to fix the source tax at 0.25% and 10% corporate tax for all export sectors.
If the source tax and corporate tax in all export sectors are fixed at their desired rates, then the export trade will progress which will help attract new investments and create new employment, they explained.
A number of plastic companies stopped operations and were listed as “sick industries” due to the pandemic, and for this, the SME Foundation proposed to withdraw the existing 3% advance tax on raw materials imported by the plastics industry.
Currently, the entrepreneurs having annual turnover from Tk50 lakh to Tk3 crore have to pay turnover tax at a rate of 4%.
They demanded to reduce the turnover tax to help the actual development of the SME sector.
Also, the companies who manufacture copper, brass, aluminium, metal with scrap have to pay a VAT of 15% in the marketing of their products.
The foundation demanded to reduce the VAT from 15% to 5% for those companies who recycle these metals.
The SME Foundation also demanded to withdraw the existing 5% supplementary duty on the local production of colour and colour products by labelling them as essential products.
The foundation also made proposals on plastic toys, frozen foods, bakery, footwear, kitchenware, tableware and HS code related products.
The SME Foundation made 12 recommendations on income tax, 12 on value-added tax and 26 on the tariff in the meeting with the NBR.
According to the SME Foundation, the NBR Chairman assured that these recommendations would be considered for the development of the SME sector, which contributes 25% to the country's economy.
