NBR Building Photo: Courtesy
Experts at a conference suggested for making tax system more growth-friendly, simple and transparent.
They suggested the National Board of Revenue (NBR) to reduce the TDS as per global practice, fix minimum tax rate for individual tax- 25 percent, impose tax at the rate of 20 percent to attract one person company and offering activity incentive for local producers as well as stressed for giving concentration on thrust sectors like leather, jute and garment fashion design, etc to create a country brand in international market.
They also suggested that NBR should carry out research and take a strategic decision about allowing exemption to increase government revenue from private sector. They opined that tax rate changes have significant impact on investment decision and investors will get benefits to prepare the budget and plan accordingly based on the tax rate.
They further suggested that NBR should publish the Annual Report timely. Since the market trends are rapidly changing, if information are available timely, it will benefit the potential investors, policy makers, economists, and organisations to assess the economy, performance and make decisions.
The discussion would help NBR finding out the area of leakage, eliminating the areas of harassment of tax-payers, and bringing all tax payers under online systems.
To promote agriculture sector the government should allow tax incentive through SRO, some assesses manipulate these incentives to evade taxes, they observed and suggested that NBR can reduce a threshold limit such as up to 25 lakhs Taka to minimize the evasion o manipulation.
Pointing out the tax on foreign nationals working in Bangladesh, they suggested to introduce provisions like withdrawals of tax and customs benefits, cash incentives, cancellations of branches permission etc for unauthorized employment. They also added that a mandatory declaration from employers should be included in the tax returns. In order to attract investment in specific sectors and boost the exports, government may offer capex subsidy of 20-25 percent of total project cost for those companies meeting the criteria.
These suggestions and recommendations were emanated from discussions at a virtual Members’ Conference on ‘Policy paper on direct and indirect tax’ organized recently by the Institute of Chartered Accountants of Bangladesh (ICAB) through online by using ZOOM app.
Muhammad Abdul Mannan, Minister for Planning attended the conference as the Chief Guest. Md. Alamgir Hossain, Member (Tax Policy) of National Board of Revenue (NBR), Md. Masud Sadiq, Member (VAT Policy) of National Board of Revenue (NBR); Khondaker Muhammad Aminur Rahman, Member, Grade-1 (Customs: Audit, Modernization and International Trade) of National Board of Revenue (NBR) and also Mr. Syed Golam Kibria, Member (Customs Policy & ICT) of National Board of Revenue (NBR) participated in the conference as Special Guests.
ICAB President Mahmudul Hasan Khusu FCA delivered address of welcome while Md Humayun Kabir FCA, Member Council and Past President-ICAB conducted the conference as the Session Chairman.
Mohammad Al Maruf Khan FCA, Partner, Howladar Yunus & Co., Chartered Accountants and Snehasish Barua FCA, Partner, Snehasish Mahmud & Co., Chartered Accountants jointly presented the keynote papers.
ICAB President Mahmudul Hasan Khusru said, taxation is indispensable in order to support the basic function of a sustainable state and to create the context for economic growth. An improved tax system is the key to financing public services, reducing inequality, making government more accountable and helping to improve self-reliance, he said and added that unfortunately, our tax rate is higher compared to tax rates of similar economies including the neighbouring countries.
He said, our tax to GDP ratio is exceptionally low; even lower than those of other countries in the region and beyond. This indicates that there must be some incompatibilities, he added.
He said, tax system in Bangladesh is gradually improving, raising more revenue and reducing the dependency on aid. However, Bangladesh is still a low tax effort country with a high buoyancy ratio, implying that the policy-makers of Bangladesh have the scope and potential to opt for greater revenue mobilization through internal resources in order to meet the budgetary deficit, he suggested.
The keynote-paper focuses the general design issues on how to make the tax system in Bangladesh more growth-friendly, simple and transparent and fairer. It also focuses on widening the tax net for revenue generation with an aim to achieve a higher tax GDP ratio, increasing private sector investment/employment generation/export diversification, to attract more FDI (foreign direct investment) in the country, to improve "Paying Taxes" indicator for ease of doing business in Bangladesh. It also includes proposals for change in VAT & SD Act and customs act.
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