The country's apex trade body is set to propose upward adjustment of tax-free threshold for individual taxpayers, reduction in the corporate tax rates and withdrawal of advance tax for import of raw materials for the upcoming budget.
In its budget proposal for financial year (FY) 2019-20, the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) will also suggest carrying out an impact assessment on the new VAT law.
It will also seek clarification on the proposed changes in VAT rates in the new VAT law that may replace the existing measures, including tariff value, value declaration process and the protection of local industry through Supplementary Duty (SD).
The apex trade body is expected to submit its pre-budget proposal before the finance minister today (Tuesday) at the 40th budget consultative committee meeting, jointly organised by the National Board of Revenue (NBR) and the FBCCI.
The FBCCI also seeks effective public-private partnership in making the new VAT law a success.
The new VAT and Supplementary Duty Act, passed by parliament in 2012, is scheduled to come into force on July 1, 2019, replacing the existing VAT law of 1991.
As per decision of the finance minister on March 31, 2019, there will be four VAT rates in the new law -- 5, 7.5, 10 and 15 per cent -- instead of uniform rate of VAT at 15 per cent. Also, the VAT-free threshold for small businesses will be Tk 5.0 million and turnover tax limit up to Tk 30 million.
The FBCCI will also propose reducing the turnover tax rate by one percentage point to 3.0 per cent from 4.0 per cent.
According to the FBCCI proposal, it is necessary to define the VAT rebate system for the businesses that would pay 10 per cent VAT.
The FBCCI will also propose implementing the new law without disturbing the existing VAT system under the VAT law of 1991.
It will seek to keep a number of provisions of the VAT law of 1991 unchanged, which include package VAT, tariff value, VAT at production stage, VAT at import stage, VAT at service stage, truncated base, supplementary duty and list of VAT-exempted products.
The apex trade body, however, supports the introduction of online VAT system, including return submission, VAT payment, VAT rebate, VAT audit etc., to ensure transparency.
Its income tax-related proposals include adjusting the tax-free ceiling upward to Tk 3,50,000 from existing Tk 2,50,000 for individual taxpayers considering the increasing living cost due to inflation.
The average rate of inflation is above 5.0 per cent in the last four years, until March 2019. The NBR last increased the tax-free ceiling in 2015.
The apex trade body will also seek to cut the corporate tax rate for non-publicly traded companies to 32.5 per cent from the existing 35 per cent and for publicly traded companies to 22.5 per cent from 25 per cent.
It will also propose to revise the ceiling of wealth surcharge upward to Tk 30 million and simplify the income tax ordinance's 3rd schedule relating to depreciation facility.
The FBCCI also seeks not to slap any customs duty above 1.0 per cent on the basic raw materials of industry in a bid to improve the country's ranking on doing business index.
