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No change in corporate tax in coming budget

  • Published at 03:49 am May 17th, 2013
No change in corporate tax in coming budget

The upcoming budget for the 2013-14 fiscal would see no change in corporate tax,

Finance Minister AMA Muhith yesterday dropped a broader hint that there would be no change in the corporate tax in next budget as business leaders urged for a restructuring to boost corporate earnings and help revive the capital market.

He gave the indication at a joint pre-budget meeting of National Board of Revenue and the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) at a hotel in Dhaka.

Muhith said the previous four years’ budget had seen futile attempts in rationalising the corporate tax. As a result, the government has decided to keep corporate tax at their existing levels.

Since starting of the pre-budget discussion, business leaders have been demanding a restructuring in the corporate tax regime.

NBR Chairman Ghulam Hussain, convener of the meeting, said the board held 51 meetings with different business organisations and received around 2000 proposals for accommodating in the budget for the fiscal 2013-14.

Out of them, the NBR considered 420 proposals for the coming budget including 97 on income tax, 189 on tariffs and duties and 134 on VAT, he said.

“We are very close to the revenue collection target that we set for the ongoing budget,” Hussain added.

Syed Sadat Almas Kabir, acting president of Bangladesh Association of Software and Information Services, proposed withdrawal of the 15% VAT on internet services, demanded tax-free facility for five years for e-commerce transactions and digitisation of the VAT collection system.

In response, the finance minister assured that efforts were on to automate the VAT collection system as soon as possible and then gradually strengthen it.

Some business leaders, including Faridpur Chamber President Awlad Hossain Babar, suggested that the NBR should expand the net of tax-payers through field level drives rather than imposing additional taxes on the existing payers.

Dhaka Chamber President Sabur Khan suggested that if the government could make having Tax Identification Numbers (TIN) mandatory for those who have trade licenses and are enlisted with the Registrar of Joint Stock Companies, revenue collection would surely increase.

Former FBCCI president AK Azad stressed on reducing of tax on capital machinery from 3% to -1% and that on basic raw materials from 5% to 2%.

In reply, Muhith said the government was trying to spread the net of tax payers, although admitting that the drive was not strong enough.

The minister assured that the government was going to consider reduction of tax on capital machinery and compulsory TIN for trade license holders in the coming budget.

Chittagong Chamber President Azizur Rahman stressed on macroeconomic components like rural firming, special allocation for river dredging, structural development of the 291 tax stations, increasing allocation for the import of modern arms and equal allocation of wealth.

“The government has already invested money on rural development and was working for developing the rural sector,” was Muhith’s response.

Atiqul Islam, president of Bangladesh Garments Manufacturers and Exporters Association (BGMEA), demanded Tk3bn allocation at 5% interest rate for the readymade garment sector for ensuring safety and compliance at the factories.

Hatem Ali, vice-president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), proposed that the garment sector be exempted from submitting VAT return every month.

He also proposed that the government should cancel the 5% tax that firms have to pay for local Letters of Credit (LC), although he said the provision should remain for international LCs.

FBCCI Director Sahadat Majumder said the manpower recruiting agents should be exempted from certain percentage of taxes as the manpower exporting sector was one of the most important in the economy.

The finance minister in response said that the government was aware of the development in the manpower exporting sector.

FBCCI President Kazi Akram Uddin Ahmad said revenue collection might be plunged into uncertainty if the NBR cancels the Pre-Shipment Inspection (PSI) system before implementing the valuation database system.

He also said a special fund of Tk1bn should be allocated for women empowerment and developing women entrepreneurs.

Akram Uddin also placed a 21-point demand including reduction of tax on the import of capital machinery and basic raw materials, introducing automation system at the ports and continuation of the PSI system.