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2019-04-08 10:46:42 BdST

MCCI pushes for corporate tax cut

The Metropolitan Chamber of Commerce and Industry (MCCI), on Sunday, demanded reduction of corporate tax, increasing tax-free ceiling for individual taxpayers, and waiving the provision for imposing double tax on companies.

The MCCI leaders also proposed setting up a time-limit for the taxmen to issue tax withholding certificate for facilitating foreign investment.

They placed the demands at a pre-budget meeting with the National Board of Revenue (NBR) at NBR conference room, chaired by the NBR Chairman Md Mosharraf Hossain Bhuiyan.

The MCCI Vice President Golam Mainuddin presented a keynote paper at the meeting on the chamber's proposals for the budget of the upcoming fiscal year (FY), 2019-20.

Pointing to tax revenue collection shortfall worth Tk 344.24 billion in the first seven months of the current FY, Mr Mainuddin said the taxmen should not impose heavy tax burden on the large taxpayers to meet their target.

"It's like a punishment for the large and compliant taxpayers. As a result, many of them may feel discouraged to be listed under the Large Taxpayers Unit (LTU), considering it unjust."

Mr Mainuddin, chairman of the British American Tobacco, Bangladesh (BATB), also urged the government to lay stress on the banking sector in the upcoming budget.

"All of the banks are currently facing liquidity crisis. The country may face problems in near future unless the banking sector is uplifted."

He also proposed to a cut back on discretionary powers of taxmen, rationalise import duty structure to facilitate the local industries, and bring down the highest rate of income tax to 25 per cent from the existing 30 per cent.

Adeeb H Khan FCA, taxation sub-committee chairman of the MCCI, proposed incorporation of 'advance ruling' provision in the tax law to ensure ease of doing business.

He also said the NBR should devise a system, under which the foreign companies can obtain Taxpayer's Identification Number (TIN) to pay tax as per the new definition of Permanent Establishment (PE).

"As per the PE definition, income of the foreign investors will be taxable, despite their not having any physical establishment in Bangladesh. But, the NBR did not elaborate on the process of tax payment."

He said there should be a time-limit -- may be of a maximum 30 days -- for the taxmen to issue certificate to the foreign companies on withholding tax.

On corporate tax, Mr Khan said the vast majority of companies are paying corporate tax at 35 per cent rate, except for the listed companies that are paying tax at 25 per cent rate.

Responding to the proposals, the NBR chairman said corporate tax rate is not high in Bangladesh for the listed companies.

If the number of the listed companies increases, more companies will be able to enjoy the lower rate, he added.

The MCCI leaders said the price declaration provision in the VAT law should be withdrawn, and it should not be imposed again by incorporating 'input-output coefficient' in the amended VAT law.

NBR member (VAT policy) Abdul Mannan Shikder said the provision will be incorporated for audit purposes only, and it is not similar to price declaration provision.

The NBR chief said the highest rate of VAT will be 15 per cent in the amended VAT law with the provision for rebate.

"We have not agreed to the previous proposal of fixing the highest VAT rate at 10 per cent," he added.

The MCCI Member and Chairman of ACI Group M Anis Ud Dowla said the taxmen have imposed double tax through the provision of slapping tax after a certain ceiling of perquisite.

Currently, the taxmen do not allow the expenditure as tax-free, if perquisite to the employees exceeds above Tk 5,50,000.

Responding to the demand, the NBR chairman said some of the foreign employees and technical experts show lower salaries and other benefits to avoid payment of tax.

Mr Dowla said strong enforcement of law (by the government) can thwart such practices rather than imposing double tax on genuine taxpayers.

Syeed Ahmed Khan of Unilever Bangladesh said the recent imposition of Supplementary Duty (SD) has impacted the usage of creams among consumers due to additional price.

"With the reduction in consumption, our sales have also seen a decreasing trend in the second half of 2018 compared to the first half," he noted.

The NBR chief said investment in manufacturing sector, not trading, will be facilitated in the upcoming budget.

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