The National Board of Revenue (NBR) chairman, Abu Hena Mohammad Rahmatul Muneem, on Thursday vowed to review the justification of advance tax rates with profit ratio of businesses in the next budget.
It seems difficult whether the businesses are making profits at the rate in which the Advance Income Tax (AIT) or Advance Tax (AT) are imposed on them, said the NBR chief at quarterly luncheon meeting of the Metropolitan Chamber of Commerce and Industry (MCCI) on its premises in the city.
His comment came following demands of the MCCI leaders to bring down the advance tax rates.
"Even, I cannot match the ratio of advance tax and profit made by businesses," he said, expressing willingness to address the issue in the next budget.
"I would try to come to a conclusion regarding the issue after discussion with the stakeholders concerned and tax officials."
The NBR chairman also focused on bringing changes in tax policies to ensure a taxpayer-friendly environment rather than gearing up implementation of the policies.
The MCCI president, Nihad Kabir, said actual payable tax in final stage increases due to deduction of AIT in import stage at 5.0 per cent rate, and it is not manageable considering the country's current economic context. Earlier, AIT was 3.0 per cent, which was quite manageable for businesses.
Ms Kabir suggested that the NBR focus on reforming tax policies, highlighting revenue mobilisation, and strengthening the board's research and development activities.
She also demanded withdrawal of minimum tax on gross receipts of loss-making companies.
"The cost of business of new companies increases due to the minimum tax. It usually takes several years for the new companies to turn into profit-making ones."
She reiterated the demand for reducing corporate tax gradually during the next few years.
On the recent Coronavirus outbreak, Ms Kabir urged the government to keep a close eye on its development and take prompt action.
The MCCI Tariff and Taxation Sub-Committee chairman, Adeeb H Khan, raised some issues regarding provisions of the new VAT law changed during the last few months by issuing Statutory Regulatory Orders (SROs).
"Three major changes in the original VAT law have created difficulties, and it's unfair for businesses," he said.
Disallowance of VAT rebate on some inputs, intervention of VAT officials in determining VATable price through input-output co-efficient, and complexities in the process of central registration are major impediments in the VAT law.
MCCI Committee member Hassan Mahmood said land has been excluded from capital assets in the tax law, causing troubles for taxpayers.
Anis Ud Dowla, the ACI Group chairman, said honest companies are facing difficulties to compete due to higher tax burden in the form of advance tax.
The A K Khan and Company Ltd managing director, Salahuddin Kasem Khan, suggested removing discriminations between the public and private economic zones (EZs) in offering benefits.
Responding to demands and suggestions of the MCCI leaders, the NBR chairman said tax rates can be lowered with the expansion of tax net. Sudden changes in tax measures may lead to drastic fall in revenue collection.
"In the last two months, I have noticed that the focus is on implementation of the tax laws to achieve the revenue collection target, while big changes can be brought through policy reform."
On research and development, he said an informal team has already been formed to collect data and take necessary steps on the basis of its result.
The MCCI vice-president Anis A Khan delivered vote of thanks in the programme.
