There is significant pressure on the government to increase turnover tax from 1% to 2.5% in the upcoming budget, said National Board of Revenue (NBR) chairman Md Abdur Rahman Khan.
However, he also said that efforts are being made to refrain from increasing the rate considering the concerns of traders.
He said these things at a pre-budget discussion organized at the NBR building in Agargaon in the capital on Tuesday (April 7).
Representatives of various business organizations including the Bangladesh Poultry Industries Association participated in the discussion.
The NBR Chairman said that the turnover tax rate is currently 1%. However, there is strong pressure on the government to increase it to 2.5%.
“There is huge pressure on us to double it this year. There is also talk of increasing 1% to 2.5% and applying it uniformly for everyone. However, we are trying not to do this. But reducing taxes is very difficult.”
He said that in the international tax system, tax is usually imposed on the profits of a company. If a company does not make a profit but has to pay tax on turnover, then it practically becomes like an indirect tax.
Still, the government has to adopt alternative methods in some cases to increase revenue due to the low overall tax collection rate in the country.
Khan said that in many cases, turnover-based tax has to be used as a 'shortcut method' due to deficiencies in the accounting and reporting of business entities.
He also said that there is very little research on whether the real benefits of tax exemptions or tax rebates are reaching the common people or not.
According to him, many times, even if the government gives tax and VAT exemptions, the benefits do not reach the consumers completely. There is a perception in the public mind that the benefits get stuck at various levels in the middle.
Regarding the complaints of businessmen regarding tax refunds, the NBR Chairman said that major reforms are underway in this sector.
Now, income tax returns are being submitted online and similarly, the refund system is also being made completely online.
He said that VAT refunds have already started being given through an automated online system. The same system has been almost completed in the case of income tax and will be introduced on a trial basis soon. Then the refund will go directly to the taxpayers' bank accounts.
The NBR chairman also highlighted the complications related to determining gross profit. He said that gross profit is still determined in many cases based on an old circular of 1954, the legal basis of which is not clear. Initiatives will be taken to review the matter and bring it into law if necessary.
He said that in many cases, differences arise between taxpayers and tax officials regarding tax determination, which ultimately leads to appeals and tribunals.
To reduce such complications, the issue of determining a standardized framework is being considered.
Stating that traders also have complaints about customs valuation and product testing, Abdur Rahman Khan said that the work of introducing a risk-based selection system to make this process more transparent and efficient is almost at its final stage. If it is implemented, unnecessary testing will be reduced and import-export activities will be completed quickly.
