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The National Board of Revenue has formed a committee to review policies on the existing tax exemptions which are offered for industrial growth in the country and outcomes of the facilities.
The revenue board on February 5 formed the committee led by NBR tax policy member Sams Uddin Ahmed.
The committee will assess sector-based performances on national capacity development and submit sector-based reports to the revenue authorities before submitting the final budget proposal by the NBR for the forthcoming financial year 2023-2024.
The committee will also submit recommendations regarding further policy reforms for rationalising the existing tax expenditure policies, NBR officials said.
Sams Uddin told New Age that the NBR was working on simplifying the tax rate structures and widening the tax base as part of boosting tax-to-gross domestic product ratio of the country.
He said, ‘It’s time to review the performance of those sectors which are enjoying several tax exemption facilities.’
‘Most of the sectors have been enjoining tax policy supports from the financial year 2008-2009 and the supports will expire on June 30, 2024,’ he said.
‘If we find that a sector enjoying tax exemption has contributed to the national growth and the facility needs to be continued for sustainability of the sector’s contribution, we may propose keeping the facility for the sector for more time,’ he said.
However, promoting local value addition, sustainable eco-friendly industrialisation and branding Bangladesh will get priority for enjoying the extended fiscal supports, he said.
The NBR will withdraw the facilities gradually and not all on a sudden so that companies get additional maturity periods and get a relief from the sudden tax burden, he said.
Since FY2009, the revenue authority has issued more than 1,000 statutory regulatory orders, special official orders and circulars regarding tax policy support aimed at industrial and national development of the country, according to the NBR.
Agriculture, pharmaceutical, power and energy, industrial and service production, infrastructure, IT, CSME, export-oriented sectors and others are enjoying the existing tax exemption policy support.
More than 2.28 per cent of the actual tax-to-GDP ratio is cut every year for offering such tax exemption facilities, said an NBR official.
The tax-GDP ratio of Bangladesh is now about 7.8 per cent, which is lower than the other countries of the world and as a result, the overall fiscal deficit is expected to widen to 5.6 per cent of GDP in FY23, which might impact the achieving of the development goals of the country, according to the IMF.
Considering Bangladesh’s large financing needs to attain the development goals, a financing gap of about $9.1 billion is expected to emerge over FY23 and FY26, said the IMF.
To minimise the external debt-to-GDP ratio, the IMF suggested that the NBR should reform policies.
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