The American Chamber of Commerce in Bangladesh (AmCham) has proposed to provide a 5% cash incentive on card-based payments to expand digital transactions.
According to the proposal, consumers will get 3% of this incentive and traders will get 2%.
The organization presented this proposal at the pre-budget discussion organized at the National Board of Revenue (NBR) building in Agargaon in the capital on Sunday (April 5).
The meeting was chaired by NBR Chairman Md Abdur Rahman Khan and was attended by senior officials of the Board of Revenue and representatives of various business organizations.
According to AmCham, the trend of using online shopping and digital payments among consumers has increased rapidly in the post-Covid period.
Especially due to the use of card-based payments and mobile financial services (MFS), the e-commerce sector is expanding. This is reducing dependence on cash and increasing transparency in financial transactions. In addition, money transfers are also becoming easier for small and medium entrepreneurs (SMEs).
The organization recommends introducing a 5% cash incentive to further encourage digital transactions.
Initially, this incentive can be given by banks, business institutions or MFS service providers and later, the proposal mentions that the information can be adjusted by submitting it to the Ministry of Finance or Bangladesh Bank.
Keeping in view the upcoming national budget, AmCham also highlighted several recommendations for improving the investment and business environment.
Among them, special emphasis has been given to simplifying tax policy, creating an investment-friendly environment and increasing digital transactions.
The organization has proposed to provide an opportunity to apply direct tax rates as per the Double Taxation Avoidance Agreement (DTAA).
In this, banks will not have to collect DTAA certificates separately. However, it has been recommended to provide a system to issue certificates within seven days of submitting the application, if necessary.
Changes have also been proposed in the field of tax deduction at source.
According to the proposal, if corporate tax is determined as per Rule 39, the tax rate at source can be set at 4.125% and otherwise at 5.25%. It has also been recommended to maintain a uniform tax rate of 37.5% for foreign and local commercial banks.
AmCham has also proposed to reduce import duty on smart cards and point of sale (POS) machines to below 15% to expand digital payment infrastructure.
In addition, AmCham has called for changes in the VAT and supplementary duty structure and recommended reducing supplementary duty on carbonated beverages from 30% to 15%.
According to the organization, as the total tax burden on the beverage sector is currently about 54%, production costs are increasing, consumer demand is decreasing and investment is being hindered.
Reducing the tax rate will have a positive impact on three areas - production, employment and revenue.
In addition, it has been proposed to bring waste collection and supply services of the ready-made garment sector under VAT exemption, so that the recycling industry is further strengthened.
It has also recommended reducing the tax rate for non-resident institutional investors to increase foreign portfolio investment.
On the other hand, the Bangladesh China Chamber of Commerce and Industry (BCCCI) has proposed setting the maximum personal income tax rate at 20% and waiving surcharge on assets up to Tk100 crore.
It also recommended making it mandatory for the garment industry to procure at least 50% of raw materials from domestic sources.
The Bangladesh Women's Chamber of Commerce and Industry has demanded setting the personal income tax-free limit at Tk4.5 lakh, reducing the trade license fee by 50%, and exempting women entrepreneurs from VAT in showrooms.
Meanwhile, the European Union's business organization EuroCham has emphasized the formulation of investment-friendly tax policies, simplification of procedures, and signing a free trade agreement (FTA) with the European Union.
At the same time, it praised the National Board of Revenue's digitalization initiatives but called for bridging the gap between policies and implementation.
