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The SME Foundation on Tuesday demanded a set of facilities related to income tax, value-added tax and customs duty for small and medium enterprises in the forthcoming national budget for the fiscal year 2021-2022 to make the fiscal policy friendly to SMEs.
It termed the sector a lifeline to the economy.
The Foundation sought tax holiday benefit for 10 years for new SMEs in all sectors to promote industrialisation and job creation.
It also demanded a reduction in corporate income tax for agro-processing industries, garment accessories and packaging sectors, agricultural machinery manufacturers and frozen foods sector.
Corporate tax for agro-processing industries should be set at between 3 per cent and 15 per cent in line with poultry feed, fish feed and dairy products manufacturing industries from current 32.5 per cent.
Excessively higher corporate tax rate is affecting the growth of the sector, it said.
It also suggested a reduction in source tax on export of garment accessories and packaging products to 0.25 per cent from existing 0.5 per cent and corporate tax rate to 12 per cent from 32.5 per cent to promote export.
Corporate tax rate for agricultural machinery manufacturers should be reduced to 20 per cent from current 32.5 per cent, it added.
Source tax on export of diversified jute products should be withdrawn, it said.
The NBR should also reinstate source tax on export subsidy previously given to the handicraft products and frozen foods.
The Foundation sought withdrawal of 2 per cent advance income tax on purchase of agricultural products through local letters of credit or other financial mechanisms as the burden of the tax went to marginalised farmers while import of the products was tax-free.
It also recommended a downward revision of the rates of tax deduction at source for SMEs.
The Foundation also sought a provision of tax refund or introduction of financial support during a crisis faced by SME sector exporters.
It also demanded exemption from payment of VAT to local production of machinery and spare parts as there is no VAT on import of the items.
The Foundation also sought reduced VAT rates for various products, including cotton thread, human-made fibre and coir fibre as well as adding all agricultural machinery to the list of VAT-exempted items at the production stage.
The Foundation requested the revenue board to increase the minimum value of imported table, kitchen or other household articles of stainless steel and hinges with bearing to prevent underinvoicing and protect the local industry.
It also sought a reduction in regulatory duty on imports of wheat starch, maize starch and aluminium wear and an increase in the duty on imports of cartons, boxes and cases of corrugated paper and paper board, printed label along with revision of duty structure for some other products.
SME Foundation consultant Lutfor Rahman placed the demands at the meeting.
At a separate meeting with the transport sector businesses, NBR chairman Abu Hena Md Rahmatul Muneem criticised the businesses for their reluctance in collecting VAT and depositing those in the government exchequer.
He said that VAT was not paid by the businesses rather they collected those from consumers and then deposited to the government.
So, there should not be any objection regarding VAT from businesses, he said.
The NBR chairman said that most of the trade bodies were expressing their reservations on VAT payment, citing various problems, including reluctance of consumers in payment of VAT.
‘It is true that many consumers are not willing to pay VAT but it is the responsibility of traders to collect the tax and deposit it in the government exchequer,’ Muneem said.
He advised the traders to include the VAT amount with the total prices of products and services to avoid problems in collecting VAT separately from consumers.
At the meeting, leaders from transport sectors demanded withdrawal of VAT on air-conditioned bus and launch considering the negative impact of COVID-19 on the income of people and overall economy.
The Launch Owners Association Bangladesh and the Bangladesh Inland Waterways (Passenger Carriers) Association said that the NBR should exempt the passengers from payment of 10 per cent VAT on air-conditioned rooms to popularise river routes for passenger transport.
Launch owners are suffering from a decline in business due to a fall in number of passengers following the COVID-19 outbreak and a rise in cost of doing business, they said.
