Regarding legalization of taxing laundered overseas money, this will send a negative message in the sake of foreign currency and revenue.
There is at best a weak incentive to declare and pay, especially for those who have already figured out how to game the system in the destination countries. Such activity will get them some certification giving legitimacy to the illicit transfers made in the past.
Why would anyone want to bring the same illicit money back, paying 7.5% net (10% tax minus the 2.5% subsidy for remitting through formal channels) when the only benefit, for all practical purposes, is to make the money white in Bangladesh unless it is facing an existential threat in their current residence abroad?
In this situation, there is no opportunity to be explanatory. That is what happened after that. The size of the budget has increased by about 20%. The budget needed to place maximum emphasis on macro stability. However, the question remains as to how much it will be possible. There are two main areas. One is inflation. Increasing subsidies on food, fertilizer and electricity will generally benefit everyone. Second, a number of initiatives have been taken to find a way out of the dollar crisis. Let's see how effective it is.
Rizwan Rahman
President, DCCI
Since the middle and lower middle-income group of the society are facing the pressure of inflation, taking it into consideration, the limit of individual income tax can be increased.
However, few slabs can be created for the higher income level group but obviously in a rational manner.
Listed companies offloading more than 10% of their paid-up capital to the market through IPO only can avail the opportunity of giving 20% corporate tax.
Both listed and non-listed companies who have cash expenditure or investment of Tk12 lakh annually and if they do transactions through banking channels are eligible to give 20% corporate tax.
If any listed company fails to comply with these two conditions, they will have to pay 25% corporate tax.
We feel that the threshold or limit in these conditions are very insignificant.
Moreover, the corporate tax rate should be reduced to be more competitive not only in the international market but also in the local market.
We need to promote export diversification. Equal corporate tax for RMG and non-RMG export sectors will facilitate the diversification process. A target of 24.9% investment from the private sector has been made.
But for that, private sector credit flow should be increased.
Mega infrastructure projects should be completed at a faster pace but at a lower price ensuring transparency and accountability. Clause number 83, 84 and 100 of goods seize provision need to be reformed.
Mamun Rashid
Economic Analyst
Positive takes from this year’s budget include the introduction of provisions covering amalgamation would enable efficient corporate restructuring.
Also, relaxation of startups driven by innovation would give impetus to the Digital Bangladesh initiative.
Increase of threshold for excess perquisite from Tk5.5 lakh to Tk10 lakh is a welcome move, as well as the lowering of tax rates of diversified export industry.
But there are also some challenges.
For example, sales promotion expense disallowance under section 30P have been retained without any further clarifications/exclusions.
Advertisement expenses which were specifically excluded in the Draft Direct Tax Act 2022 did not find place in the Finance Bill 2022
There has been no change/relief on account of Royalty expenses or even TDS rates for non-residents.
Return submission for non-resident is mandatory whereas clarity in obtaining ETIN for non-residents is not yet addressed.
WPPF, a statutory payment required by Labor Law would attract disallowance.
Furthermore, a tax exemption or reduced tax rated company would be taxed at a regular rate in respect of such expenses. This may be reconsidered.
Any default with respect to withholding tax (WHT) may result in loss of tax exemption/reduced tax rates.
The corresponding expenses are already subjected to tax in the existing law. Hence, provisions relating to loss of entire exemption seems onerous.
Export of services proposed to be taxed at 12% on taxable profit. Inclusion of WHT under section 52Q (10% on revenue) into the ambit of section 82C may negate the relevance of reduction of tax rate.
Rate of tax under section 53BB was 0.5% which was enhanced to 1%.
Syed Almas Kabir
President, Bangladesh Malaysia Chamber of Commerce and Industry (BMCCI)
I thank the finance minister for the proposed exemption for startups on all types of reporting besides tax return will ease the challenges they face.
Also, allowing them to set off and carry forward losses for nine years, and withdrawal of restrictions on expenditure will facilitate the young entrepreneurs to grow their businesses.
Lowering the turnover tax to 0.1% from 0.6% for the startup companies will be a great help for the budding businesses.
However, it is very discouraging to see the internet services have not been included in the list of IT Enabled Services in spite of being the primary ingredient of Digital Bangladesh.
Even though it has long been proposed, I see no such mention. This would exempt the ISP's from corporate tax including the 10% AIT, and would make broadband internet significantly cheaper for the end-users.
Expansion of broadband internet connectivity will increase economic activities in the remote areas. Affordable broadband internet would generate new businesses including increased digital commerce, ICT freelancing, ITES export, etc.
Introducing 15% VAT on imported laptops, computer printers and toner cartridges will limit the growth of automation.
I have been expecting that the government would formulate the next national budget in the spirit of Digital Bangladesh.
Unfortunately, the extra VAT on mobile-based services including mobile banking, ride-sharing, etc. seems to be in contradiction to it.
A 5% VAT on co-working space will also be a burden to the entrepreneurs and startups.
I expected the government would waive the 10% AIT on ITES and 5% VAT on software to encourage the local IT industry and make them competitive over foreign software & services, but I have not seen any such measure.
The proposed incentive on digital payment would have pushed us towards the coveted cashless economy, but there is no such provision.
Moreover, the mobile banking operations have been burdened with 12% VAT.
Having said all these, I believe the policymakers will consider the above-mentioned points and finalize the National Budget for FY23 according to the government's mandate of creating a Digital Bangladesh having a cashless economy and a knowledge-based society.
Waseem Alim
CEO of Chaldal
The withdrawal of restrictions on expenditure and decrease in rate of turnover tax are great and visionary steps.
In the early years we need to give startups the space to breathe and grow.
However, the VAT policy is not strictly implemented in the offline world, but VAT authorities are pushing for full implementation for online services,
This is unfair and should be resolved. How will we compete with places like Chawk Bazar?
Shaheen Ahmed
President of the Bangladesh Tanners Association (BTA)
It is a very important decision to promote industries other than RMG and maintain equality with the export-oriented garment sector.
We have been requesting to implement this for a long time. It will help to improve our competitiveness in the current global scenario and will also be helpful in reducing the trade deficit to some extent.
