Sudden changes in government policies and taxes could discourage foreign investors who have invested in Bangladesh based on the commitment of certain facilities, the Foreign Investors Chamber of Commerce and Industry (Ficci) said on Monday.
During a press conference held at a hotel in the capital, Rupali Chowdhury, former president of Ficci, raised concerns over the sudden withdrawal of several benefits for investors in private economic zones in the proposed budget.
She said such abrupt shifts send wrong signals to the investors and would make it difficult to attract and retain foreign investments.
Chowdhury highlighted the incentives offered by the neighbouring countries to attract foreign direct investment (FDI) and said: "Bangladesh is not the only destination for investment. They [Foreign investors] consider the benefits available in other countries as well."
"There were some minimum facilities here [in Bangladesh], but now they too have been withdrawn," she added.
Shehzad Munim, adviser of Ficci and managing director of British American Tobacco Bangladesh Limited, said: "I have invested here on the basis of promised benefits to investors. If there is a sudden policy change, it will be difficult to attract these investors again."
Ficci president Zaved Akhter stressed the potential negative impact of withdrawing promised benefits to investors in privately established economic zones.
"This will raise questions in investors' minds regarding the country's credibility. They may not invest again, and those in the pipeline will also rethink," he warned.
The press conference, titled "Press Meet on National Budget 2024-25," was attended by senior leaders of FICCI and top officials from various foreign investment organizations.
Snehasish Barua, partner of a chartered accountant firm Snehasish Mahmud and Co, presented the key changes of the finance bill.
While Ficci appreciated some positive initiatives proposed in the budget, the primary focus was on the risks posed by policy instability.
Ficci also welcomed the acceptance of their proposed amendments in the Finance Bill 2024, particularly the prospective tax rate, fulfilling a long-standing demand from the business community.
Maintaining these rates will enable businesses to plan and invest effectively. Additionally, Ficci expressed gratitude for the acceptance of their proposed amendment simplifying tax deduction at source for industrial raw materials.
The extension of time for Monthly Withholding Tax Return submission is also crucial, accepted through the Finance Bill 2024.
Ficci appreciated tax reforms in the proposed 2024-2025 budget to simplify the tax system. But high Effective Tax Rates (ETR) remains a key concern for the industry.
While they appreciated the 15% income tax rate for private funds, they note concerns about exempting public funds from taxation, creating disparities between government and private sector employees.
NBR has proposed an increase in personal income tax rate. This measure may be seen as unfair by regular taxpayers and could inadvertently encourage tax evasion. Such changes in tax slab will discourage compliant taxpayers as they are being penalized for their hard earned, also making this retrospective is against NBR’s current policy of predictive tax culture hence recommended to restate last year rate to be applicable for AY 2024-25.
The principle of reducing tax rates while widening the tax net aims to create a fairer and more efficient tax system. This encourages compliance, increases taxpayers, boosts economic growth, ensures fairer tax distribution, and simplifies tax administration, leading to more stable and predictable tax revenue.
