• Thursday, Jun 24, 2021
  • Last Update : 09:18 pm

Budget FY22: AIT, AT still bears major burden for businesses

  • Published at 08:23 pm June 10th, 2021

Stakeholders claimed AIT and advance trade VAT (ATV) increase the cost of business

The local business community and association leaders are now seeking complete removal of both advanced income tax (AIT) and advance tax (AT) gradually over the next few years.

Finance Minister AHM Kamal has proposed to decrease AIT from 3% to 2% for the next fiscal year (FY 2021-22) during the proposed budget presentation on June 3.

Stakeholders claimed AIT and advance trade VAT (ATV) increase the cost of business, and considering that the ongoing coronavirus pandemic has hurt all companies, they had demanded the withdrawal. 

Kamal proposed AT exemption on thresher machine, power reaper, power tiller, operated seeder, combined harvester, rotary tiller, weeder, and winnower - to modernize the agricultural sector and reduce the production and marketing cost of agricultural machinery. 

He had also proposed imposing a 10% tax on income of over Tk20 lakh and 15% for over Tk30 lakh, up from the present 10% in the fish and poultry hatchery farmers.

Also Read - ‘Increase tax net, don’t squeeze existing taxpayers’

Furthermore, although AIT has been reduced from 3% to 2% in the proposed budget, it is still a burden for the import-dependent cement sector, according to Alamgir Kabir, president of Bangladesh Cement Manufacturers Association (BCMA).

In a post-budget dialogue held virtually by the Chittagong Chamber of Commerce and Industry (CCCI) on Tuesday, he said that the average import duty stands at 10% to 11% making it difficult for the highly competitive sector to survive. 

Besides, Tk500 needs to be paid as import duty per tonne of clinker, the main raw material of cement, he also said.

He proposed withdrawing the 3% AIT by issuing a statutory regulatory order (SRO). 

According to Kabir, around Tk1,000 crore worth of refundable AIT is yet to be refunded to businesses by the National Board of Revenue(NBR). 

Before the budget, at the Consultative Committee of NBR, he had said: "There is a huge lack of working capital in the cement sector, and if the AIT is refunded properly in time, the sector does not have to depend on bank loans." 

In contrast, the proposed budget for the next fiscal year did not repeal or reduce the 15% supplementary duty on the production and supply of domestic tiles.

According to the Bangladesh Ceramic Manufacturers and Exporters Association (BCMEA), the tariff on imported tiles has been reduced to $1 per square meter, so the price of imported tiles can be reduced up to Tk10 per square foot.

The tariff on imported tiles has been reduced without withdrawing the supplementary duty at the production and supply stage. This will increase imports and the suffering of local entrepreneurs, says Shirajul Islam Mollah, president of BCMEA.

Also Read - Rampant smuggling, high taxes, huge revenue loss for Bangladesh

According to the businesses in the industry, a product worth Tk100 incurs Tk15 supplementary duty and an additional Tk15 VAT. In this case, the withdrawal of tariffs on imported tiles without reducing or withdrawing SD or VAT will hinder local tiles entrepreneurs.

On the other hand, in a bid to help steel manufacturers of the country in coping with the rocketing prices of items in the global market, the Bangladesh Steel Manufacturers Association (BSMA) had also urged the government to reduce customs duty (CD) and AIT on the import of scrap - the key raw material for manufacturing steel. 

According to BSMA, the customs duty for scraps is Tk1,500 per ton and AIT Tk800 per ton. 

It had requested the government to reduce it as it was not mentioned in the just-tabled proposed budget for the upcoming financial year 2021-22 (FY'22).

Regarding source tax, Faruque Hassan, president of BGMEA, during a post-budget press conference demanded the continuation of the existing 0.5% source tax for the next five years, though a reduction to 0.25% was proposed before the budget; as the finance minister did not clearly mention the rate of source tax during his budget speech.

Also Read - Nasim Manzur: Tax reforms imperative in making Bangladesh investor-friendly

Even the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) had also expressed dissatisfaction over the increase in advance income tax (AIT) from 5% to 20% in the proposed budget for the 2021-2022 fiscal year, fearing disruption in the ease of doing business.

In the proposed budget, the government reduced the rate of business turnover tax for individual taxpayers from 0.50% to 0.25%. 

The FBCCI urged the government to make the rate effective for all businesses.

Facebook 50
blogger sharing button blogger
buffer sharing button buffer
diaspora sharing button diaspora
digg sharing button digg
douban sharing button douban
email sharing button email
evernote sharing button evernote
flipboard sharing button flipboard
pocket sharing button getpocket
github sharing button github
gmail sharing button gmail
googlebookmarks sharing button googlebookmarks
hackernews sharing button hackernews
instapaper sharing button instapaper
line sharing button line
linkedin sharing button linkedin
livejournal sharing button livejournal
mailru sharing button mailru
medium sharing button medium
meneame sharing button meneame
messenger sharing button messenger
odnoklassniki sharing button odnoklassniki
pinterest sharing button pinterest
print sharing button print
qzone sharing button qzone
reddit sharing button reddit
refind sharing button refind
renren sharing button renren
skype sharing button skype
snapchat sharing button snapchat
surfingbird sharing button surfingbird
telegram sharing button telegram
tumblr sharing button tumblr
twitter sharing button twitter
vk sharing button vk
wechat sharing button wechat
weibo sharing button weibo
whatsapp sharing button whatsapp
wordpress sharing button wordpress
xing sharing button xing
yahoomail sharing button yahoomail