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The Foreign Investors’ Chamber of Commerce & Industry on Friday said that the proposed budget of Tk 5,23,190 crore for the next fiscal year was challenging considering the budget growth in the previous year.
Finance minister AHM Mustafa Kamal placed the national budget for the financial year of 2019-20 before parliament on Thursday.
In the post-budget reaction, the FICCI said that the proposed budget of Tk 5,23,190 crore, which is 18.22 per cent higher in size than that of the revised budget of the outgoing fiscal year, was challenging considering 12.60 per cent growth in FY19.
It also expressed concern over bridging the deficit with fund from banking sources, which might tighten the liquidity situation.
The government did not cut corporate tax rate that should be reduced gradually considering the rates prevailing in other countries, it said.
The association fears that the cost of locally manufactured products would go up significantly and face competition from imported ones as the government put supplementary duty on supply level instead of manufacturing stage.
The move would discourage local production.
Tax that has been proposed on direct materials would be detrimental to industrial growth, it said.
The Finance Act, 2017 had a bold provision of withdrawing withholding tax on the supply of direct materials, it said.
The proposed increase in SD, minimum income tax and SIM tax on telecom services would contradict the government’s vision of digitalization of Bangladesh.
The Chamber said that the government did not consider allowing well-structured and transparent companies at least six months for implementation of the provision of new VAT and SD Act, 2012 and Rules, 2016 in their business process as they required sufficient time to accommodate the provision.
The government also did not consider withdrawing the existing ceiling on head office expense, royalty and technical assistance fees that would adversely impact on the inflow of FDI in Bangladesh.
The Account Current balance under VAT Act, 1991 will be adjustable under the new VAT law only to the extent of 10 per cent per month. This provision should be withdrawn and the balance be adjustable immediately, it said.
The Chamber feels that the GDP growth target of 8.2 per cent is achievable provided that GDP-Investment ratio increases to the expected level of 32 per cent.
The Chamber appreciates notable allocation for human resource development.
The association hailed the initiative to withdraw tax on the dividend received from non-resident Bangladeshi company.
It also appreciated for the fixation of a time limit for the issuance of certificates by the National Board of Revenue under double taxation treaty.
The Chamber also welcomed the government for increasing the threshold of wealth surcharge and dividend income exemption threshold, and withdrawal of the restriction on taking input VAT rebate from certain services.
source (NA)
