Published: Friday, May 17, 2013

FBCCI demands cuts in corporate tax 

Muhith says he feels uncomfortable in preparing the next budget due to the ongoing political violence

From left, Kazi Akram Uddin Ahmed, FBCCI president; Dilip Barua, industries minister; AMA Muhith, finance minister; and Ghulam Hussain, NBR chairman, attend a pre-budget meeting at Sonargaon hotel in Dhaka yesterday.  Photo: Star

From left, Kazi Akram Uddin Ahmed, FBCCI president; Dilip Barua, industries minister; AMA Muhith, finance minister; and Ghulam Hussain, NBR chairman, attend a pre-budget meeting at Sonargaon hotel in Dhaka yesterday. Photo: Star

The apex trade body yesterday demanded a raise in income tax-free threshold, cuts in corporate tax and the continuation of tax breaks in the budget for the upcoming fiscal year.
The Federation of Bangladesh Chambers of Commerce and Industry said the income tax-free limit should be raised to Tk 2.40 lakh from the current Tk 2 lakh, as living cost has gone up.
“The corporate tax rate is much higher than that for individual income tax, which discourages investment. So, it should be cut by 5 percentage points to make it more reasonable,” President of the chamber Kazi Akram Uddin Ahmed said.
He spoke at a meeting with the National Board of Revenue at Sonargaon Hotel in Dhaka. The tax administrator and the FBCCI jointly organised the meeting.
Ahmed also demanded a complete withdrawal of advance income tax on basic industrial raw materials. The tax at source for exports should come down to 0.60 percent from 0.80 percent, he said.
He also proposed to impose 1 percent tax on turnover between Tk 70 lakh and Tk 1 crore, 2 percent on turnover between Tk 1 crore and Tk 2 crore, and 3 percent on turnover between Tk 2 crore and Tk 5 crore.
Ahmed demanded a 2 percent VAT on commodity traders, commercial importers, small and retail businesses, shop-owners and service providers, from 4 percent now.
Finance Minister AMA Muhith said he was feeling uncomfortable in preparing the next budget due to the anarchy unleashed across the country in the recent months.”For the last several months an evil design to stage anarchy in the country has put me into a hard time in preparing the budget,” Muhith said about the June 6 budget.
Muhith also said the next budget would not be an ambitious one.
On the FBCCI’s call to allow whitening of black money without any fine, he said the scope for whitening money, which already exists in the current budget, is internationally recognised, but one must pay fine to do that. The habit of tax evasion will come down when the new VAT act comes into effect in 2015, the minister said.
Muhith also said there is no reason for concern about the government initiative to implement the Padma bridge project with domestic resources.
“Tk 5,000 crore will be allocated for the project from the incremental growth in revenue earnings,” he said, adding that allocations for other ministries would not suffer for that.
Referring to the demands of lowering the tax and VAT rates by various business leaders, Muhith said the tax-GDP ratio in Bangladesh is the lowest in this region and perhaps the lowest in the world.
“When we’ve assumed office, the tax-GDP ratio was less than 10 percent, but now it reaches 13.4 percent,” he added.
Industries Minister Dilip Barua said there should always be consistency in tariff structure so entrepreneurs and industrialists do not face troubles after setting up new ventures.
The FBCCI president said the revenue generation efforts could face problems if the pre-shipment inspection system is scrapped by June 30, as planned, without ensuring a valuation database. So, the system should be phased out gradually, he added.
Atiqul Islam, president of Bangladesh Garment Manufacturers and Exporters Association, called upon the government to allocate a fund of Tk 300 crore at 5 percent interest rate so garment makers, who run their factories on rented buildings, can make their own buildings.
Akram Hossain, a former president of the FBCCI, said the country needs to devise a long-term plan to bring black money into the formal economy.
AK Azad, president of Bangladesh Chamber of Industries, said the government should set up special economic zones. Otherwise, tragedies like Rana Plaza building collapse would continue to take place.
Jahangir Alamin, president of Bangladesh Textile Mills Association, said there should be 10 percent incentives for manufacturers who use effluent treatment plants.
Jashim Uddin, a former vice president of the FBCCI, said the 15 percent value added tax on toys industry should be abolished to help the local makers compete with their Chinese counterparts.
Sabur Khan, president of Dhaka Chamber of Commerce and Industry, urged the government to give tax exemption benefits to new entrepreneurs for the first three years of their business.
Mohammad Hatem, vice president of Bangladesh Knitwear Manufacturers and Exporters Association, said incentives for entering new export markets should continue for another three years and the rate should be raised to 5 percent from 2 percent.
Syed Almas Kabir, vice president of Bangladesh Association of Software and Information Services, said the 15 percent VAT on internet use should go. The VAT on the transactions using e-commerce should also be withdrawn to promote e-commerce.
He called for VAT automation, saying such modernisation of the process could help the country earn Tk 250 crore more as VAT.
NBR Chairman Ghulam Hussain moderated the meeting.

  • moh karim

    Muhith has no shame –he talks honesty but allows Black money cleaning schemes. What a rubbish!

  • Iftekhar Hassan

    Now this is a great idea….that shall make a fox run ! keep committing crime and corruption on a relentlessly basis and acquire black money any way possible. Knowing full well, politicians will find a way to make these black money white……oops, were, politicians were the partners in original crime?