The Bangladesh Chamber of Industries (BCI) expressed concern over the increase of source tax on export from 0.5% to 1% which will have a negative impact on export, considering the present global scenario.
The apex body of the industries proposed to keep source tax as before.
Anwar-ul Alam Chowdhury (Parvez), president of BCI, revealed it in reaction to the proposed national budget for fiscal year 2022-2023 which was proposed by the finance minister in the parliament last week.
However, the chamber appreciated the proposal to continue the cash incentive given on remittance income and also proposed to encourage remittance income by rescheduling dollar price.
He said the ongoing global economic period was crucial and that earning foreign currency has become difficult.
“I hope the 12% tax rate for all export-oriented industries like readymade garments (RMG) will increase exports, which was a fulfillment of a long-standing demand of BCI,” he added.
He further said that inflation control is a key challenge and, in the budget, this has been set at 5.6% while the current rate is 6.3%.
However, the budget did not give a pathway for that, he mentioned, adding that to control inflation the capacity of local industries should be expanded.
He also said that per kilogram of rice for the poor and low-income group has been fixed at Tk15 from Tk10 and he proposed re-fixing it as before.
The budget was a time-befitting one in the wake of the country's economic recovery process in the post pandemic era along with the war between Russia and Ukraine with the target of attaining 7.5% economic growth and containing inflation target at 5.6%, he added.
He also said that the budget seemed to be a challenging one to achieve unless proper monitoring, efficiency, transparency, accountability and proper executive planning were not ensured and addressed.
The BCI also proposed to exempt VAT from raw materials import for the interest of enhancing efficiency of start-up entrepreneurs, micro and small industries and also urged to repeal VAT on all kinds of utilities.
“We laud the decision fixing 0.1% from 0.6% turnover tax rate for start-up entrepreneurship. We propose to keep provision in the budget forming a special fund and a fund disbursement policy for the start-up entrepreneurs,” he added.
He also said that the government proposed a cut in the corporate tax rate by 2.5% for listed companies with a condition that all financial transactions will be conducted through banks which will be difficult to comply with.
However, considering the inflation and cost of living the limit of tax-free income for individuals should be increased to from Tk3 lakh to Tk4 lakh, he added.
To create a friendly environment BCI also proposed to introduce a digital system in paying taxes where people will enjoy transparent and hassle-free benefits.
“We propose to repeal AIT and AT. In procuring raw-materials rate of source tax has been reduced from 7% to 4% and in supplying products rate has been fixed 5% from 7%. We propose to fully repeal this imposition, because source tax increases the cost of business and it is adjustable,” he added.
Parvez also hailed the budget proposals regarding the health sector but requested reconsideration of the withdrawal of the tax-free benefit for disinfection and PPEs.
They also congratulated for the reduction of tax rate for import of raw materials used in production of steel products.
However, the BCI said that there are some challenging issues in the budget including promoting private investment, employment generating, revenue deficit and financing.
