ICAB suggests 2.0pc cut in corporate tax

The Institute of Chartered Accountants of Bangladesh (ICAB) Sunday suggested 2.0 per cent cut in the corporate tax in the budget for the next financial year (FY).

Investors would be encouraged to invest more funds following such cut and help generate additional employment opportunities.

Corporate tax rate in Bangladesh is one of the highest in this region, contributing to flight of capital abroad.

The apex body of chartered accountants shared its thoughts on the National Budget 2019-20 at a press conference on its premises.

ICAB president AF Nesaruddin delivered opening remarks while taxation and corporate laws committee (TCLC) chairman Md Humayun Kabir presented a keynote on income tax, VAT and customs policies.

ICAB members said VAT rates for essential products should be determined cautiously if multiple rates are introduced in the new VAT law.

Some six sectors contribute two-thirds of the aggregate VAT collection, so it will be illogical to bring down all existing VAT rates to 10 per cent from 15 per cent, they felt.

Mr Kabir said it is not true that corporate tax cut would affect revenue collection; rather it helps increase collection in the long run, making contribution to the national economy.

"It's untrue that the revenue board would be losing a significant amount of tax following the cut in corporate tax rates made effective last year," he said in reply to media queries.

Figures and analyses show tax collection from corporate bodies rather increased this year, reflecting that rational tax rates encourage taxpayers, he added.

The ICAB also proposed to introduce a new tax slab at a rate of 5.0 per cent for an individual taxpayers and set the maximum slab at 25 per cent for them.

Currently, the tax slab for an individual taxpayer starts from 10 per cent and ends at a maximum of 30 per cent.

However, the ICAB members said effective tax rate stands at 39-40 per cent for taxpayers due to surcharge and other cash expenditure disallowances.

To simplify tax rebate calculation process, the institute proposed the taxman to offer 15 per cent tax rebate directly on 25 per cent of income.

It suggested analysing sector-wise GDP (gross domestic product) growth to compare revenue collection growth.

The ICAB also proposed to contact e-TIN (electronic taxpayer's identification number) holders to encourage them to submit tax returns.

Even small and new entrepreneurs should be allowed to enjoy tax-free facility on their earnings up to Tk 5.0 million, it argued.

On the new VAT law, the institute proposed increase in the VAT-free turnover limit to Tk 4.8 million to encourage small businesses.

It also suggested raising the VAT-free ceiling of turnover tax to Tk 18 million and keeping the rate unchanged at 3.0 per cent.

The ICAB members said chartered accountants are currently allowed to attend in hearing as taxpayers' representatives.

But the provision is not incorporated into the new VAT law slated for implementation from July 01, they cited.

They strongly demanded incorporating the provision in section 130 of the VAT Law 2012.

The ICAB sought withdrawal of a new provision of paying 10 per cent disputed tax in advance 'in each stage' if any taxpayer wants to make an appeal to the High Court.

The existing provision in VAT Law 1991 to pay advance tax at the said rate 'in any stage' should remain unchanged.

ICAB president Nesaruddin said his institute has an automated system to check any fake audit report.

A panel has been formed to take punitive measures against any ICAB member who will prepare a doctored audit report, he added.

TCLC member Snehasish Barua and secretary Muhammad Imrul Quayes, among others, also spoke at the event.