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The Metropolitan Chamber of Commerce and Industry (MCCI) yesterday demanded the government reduce corporate tax in the national budget this year as well in order to bring the rate to a rational level.
The government reduced corporate tax by 2.5 percentage points in each of the last two budgets, bringing the rate down to 30 per cent.
The government should again reduce the rate given that 30 per cent is still too high even in the South Asian regional perspective, according to the MCCI leaders at a pre-budget discussion with officials of the National Board of Revenue (NBR) at the tax administration office in Dhaka.
In his budget proposal for fiscal 2022-23, MCCI President Md Saiful Islam said expenses such as tax deducted at source are so high that businesses are yet to enjoy the overall 5 per cent reduction in corporate tax.
For instance, corporate tax is not retained at 22.5 per cent in the case of publicly listed companies. Instead, the rate escalates to 40 per cent to 50 per cent in varying cases.
“So, the issue should be considered again,” Islam said.
Besides, doing business in Bangladesh has become more expensive and time-consuming as the Office of the Comptroller and Auditor General is inspecting financial documents even after the concerned offices settle their tax payments with the NBR.
“So, the NBR should also check this issue,” he added.
The MCCI chief also demanded the 5 per cent to 15 per cent supplementary duty imposed on the production stage of some widely used, locally-made goods be removed as it opposes regulations in this regard.
As per supplementary duty law, the charge is imposable only on luxury or non-essential goods.
Syed Nasim Manzur, a former MCCI president, said Bangladesh would lose preferential access to the EU in 2029 following its graduation from a least-developed country three years prior.
But while local exporters are set to face 16 per cent duty on shipments to the major trade bloc after graduation, those in Vietnam will enjoy zero-duty benefits as the country has already signed free trade agreements to this end.
In addition, the ease of doing business in Bangladesh needs to improve so that the local exporters can become more competitive in the global market.
Manzur also suggested the tax administration enforce a uniform source tax for all export-oriented sectors.
The rate imposed should remain unchanged for a prolonged period with adjustments coming only once every five years in order to make it predictable.
Manzur urged the government to expand the tax net as well since the burden of meeting its revenue target mostly falls on large companies and those who already pay their taxes regularly.
The corporate tax rate should also be made unified for other sectors as the overall garment industry is enjoying 12.5 per cent duty while green apparel units pay 10 per cent, he said.
Nihad Kabir, the immediate past president of the MCCI, said other countries in the Indian subcontinent have already reduced their corporate tax rates substantially.
“So, Bangladesh should follow suit,” she said, suggesting the NBR take measures regarding the tax policy to ready the country for any post-graduation challenges.
There is rationality behind demanding another reduction in corporate tax but doing so runs a high risk of hampering revenue collection, said NBR Chairman Abu Hena Md Rahmatul Muneem.
Although corporate tax is currently 30 per cent, the actual rates imposed are not that high as almost all industries enjoy various tax benefits and waivers under different government policies.
Still, though, a few sectors do face the high 30 per cent tax rate, he said.
“So, we are working to improve the ease of doing business and support these businesses. We also know the upcoming challenges of graduation and are taking measures to face them,” Muneem said.
Muneem went on to say that the NBR has been working to expand the tax net so that they do not face challenges in revenue collection after graduation.
Habibullah N Karim, vice-president of the MCCI, and Adeeb Hossain Khan, a director, also spoke.
(TDS)
