The Dhaka Chamber of Commerce and Industry (DCCI) on Wednesday proposed a gradual cut in the corporate tax rates, starting from the next fiscal year (FY).
As per the plan, the chamber sought a 2.5 per cent cut in FY2021-22, followed by 5.0 per cent in FY2022-23 and 7.5 per cent in FY2023-24.
The downsizing of the corporate tax rate is necessary to boost the private investment, DCCI president Rizwan Rahman said while presenting the proposals at a pre-budget meeting, held at the premises of National Board of Revenue (NBR).
He pointed out that the corporate tax rate in Bangladesh ranges between 32.5 per cent and 45 per cent, while the average rate of the tax is 25.2 per cent in India, 29 per cent in Pakistan, 28 per cent in Sri Lanka and 20 per cent in Vietnam, Indonesia and Myanmar.
He also sought tax benefit for research and development activities of companies, revision of the provision of minimum tax under section 82 C, reduction of tax rate on gross receipt of businesses and automation of income tax and VAT departments.
Mr Rahman also suggested a cut in the time for providing VAT rebates to the businesses to one month instead of three months, withdrawal of discretionary power of field-level VAT officials below the ranks of assistant commissioner or assistant director.
He proposed that the businesses who are paying VAT at 15 per cent rate, be exempted from paying VAT at source.
The DCCI president also proposed to exempt Advance Tax (AT) on import of industrial raw materials and capital machinery as the businesses have to pay higher costs to collect VAT certificates in this regard.
He proposed increasing the turnover limit for businesses to Tk 40 million from current Tk 30 million.
On banking sector, the DCCI president said the excise duty is imposed twice on the businesses while obtaining loan from banks.
"Businesses have to pay excise duty first on loan account and later on depositing the amount of loan into another account," he said, urging the authorities to resolve the issue in the upcoming budget.
On the share market, Mr Rahman sought five-year tax holiday facility for luring investment in green-field infrastructure projects.
He also demanded continuation of VAT exemption for selling jute goods in the local market.
The DCCI leader demanded incentives for leather sector identical to that are given to the readymade garments sector.
Leather industries, enjoying bonded warehouse facility, have to renew their bond licences every two years while it is three years for the RMG sector, he noted.
There is no separate benefit for leather industries having green building certification, which the RMG sector has been enjoying, he added.
The DCCI president also proposed a cut in corporate tax rates for leather industries as enjoyed by the RMG industries. He suggested offering tax benefit for green companies of leather sector and allowing them to renew bond licences every three years.
In response, NBR chairman Abu Hena Md Rahmatul Muneem, who presided over the meeting, said that they devise fiscal measures not only focussing on revenue earning, but also on creating new sources of revenue earning.
"Trust building between businesses and taxmen is important to simplify system which is not yet there," he added.
Appreciating the DCCI proposals, the NBR chairman said there is scope to revisit some fiscal measures specially simplification of tax payment process.