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Leaders of the country’s two leading chambers on Wednesday proposed that the National Board of Revenue (NBR) allow gradual transition to a cashless economy, as non-cash payments are still not widely practiced.
They said that companies were unable to enjoy reduced corporate tax rates in the present context due to imposition of conditions on cash transactions.
“We proposed withdrawal of the condition on cashless transactions to avail the reduced rates of corporate tax,” said Metropolitan Chamber of Commerce and Industry (MCCI) President Saiful Islam.
In the budget for the current fiscal FY23, the government has slapped a cap of Tk36 lakh on cash transaction of the corporate taxpayers to avail the reduced rates of corporate tax.
The MCCI has not proposed reduction of corporate tax rates for the upcoming FY, but to relax the conditions to avail the current FY’s rate.
It needs to be acknowledged that a major portion of the economy of Bangladesh is still informal, where non-cash payments are still not widely accepted, said Foreign Investors Chamber of Commerce and Industry (Ficci) president Naser Ezaz Bijoy.
To allow the gradual transition to a cashless economy, allowable limits for cash payments can be gradually brought down to zero after four years, he also said.
The Ficci president proposed to link the ceiling of cash transactions with the turnover of the respective companies.
NBR Chairman Abu Hena Md Rahmatul Muneem chaired the meeting with Ficci, while NBR Member (customs – policy) Masud Sadiq presided over the meeting with MCCI.
Speaking at the program, the NBR chairman said they are sorting out the areas for cash transactions to devise a control mechanism.
People will have to adopt the culture of taking invoices after obtaining services or purchasing goods, he added.
The MCCI president said the effective tax rate is high in Bangladesh due to higher disallowance of expenses by taxmen and tax deducted at source (TDS).
Businesses cannot avail the reduced rates of corporate tax, which surge to 40-50% instead of the existing 20% due to those factors, he opined.
Both the MCCI and Ficci proposed to narrow the areas of proof of submission of tax return (PSR), recommending some amendments.
The chamber leaders also proposed to follow transaction value of products at the time of customs assessment – instead of database or record price, reduce supplementary duty, automate tax department, and rationalize TDS.
The FICCI leaders also proposed to rationalize the impact of minimum tax against TDS to help businesses avail the benefit of corporate tax reduction, and to calculate duty taxes on the basis of exchange rates.
The Ficci president said the NBR has changed the HS codes for various products during the last few years that are in complete divergence from the World Customs Organization’s (WCO) HS code’s guidelines.
Naser Ezaz Bijoy also proposed to use Document Verification System (DVS) to identify income and expense, which will gradually help to rationalize and eliminate TDS from the minimum tax provision.
(DT)
