Institute of Chartered Accountants in Bangladesh on Sunday urged the government to reduce the rates of taxes including corporate and income taxes so that country’s businesses can remain competitive enough in the global market to attract foreign direct investment.
At a press conference, chartered accountants demanded reformation of the existing tax system to encourage investment and discourage capital flight.
Citing examples from neighboring countries, they said that tax rates should help manufacturers remain competitive in the global market; otherwise, FDI would not come here.
‘Increasing tax rate would not lead anything positive in the economy rather the government should extend the tax net.
Only 16 lakh people in Bangladesh submit tax returns, which is one percent of the total population and the percentage is not enough to become a middle-income country,’ ICAB president AF Nesaruddin said at the conference.
ICAB organized the press conference on the upcoming national budget for the fiscal year of 2019-20 at the office of the institute in capital Dhaka.
Nesaruddin said that ICAB sent a proposal on the upcoming national budget to National Board of Revenue, recommending corporate tax rate be cut by 2 percent for all sectors and the highest slab of income tax be reduced to 25 percent from the existing 30 percent.
‘There is a tax fear among people and NBR would have to dispel it. To dispel the tax fear, the tax department would have to be fair,’ he said.
‘Taxation is an important tool for the economy but we have to set our economic priority. Private sector investment is very slow for last few years and our fiscal policy should be encouraging for investment and employment generation and discouraging for capital flight,’ said former ICAB president Md Humayun Kabir.
If the government reduces taxes including corporate tax and income tax, it would increase investment, employment, and productivity and ultimately increase the revenue generation for the government, he said.
‘We have proposed that the highest slab of income tax rate be cut to 25 percent from 30 percent and the initial slab be cut to 5 percent from 10 percent. If the government implements the proposed rates, the culture of paying tax in the country would improve,’ Humayun said.
Regarding value-added tax, he said that the 10 percent standard rate would be acceptable but it would not be applicable to all products.
Humayun suggested higher VAT rates on the products which are injurious to health and less than 10 percent on the products which are essential for people.
He proposed increasing the VAT-free turnover limit to Tk 48 lakh from Tk 36 lakh for small traders and raising the turnover tax limit to Tk 1.8 crore from Tk 1.5 crore.
Replying to a question, Humayun said that if NBR scrapped the VAT-free turnover limit, it would increase the plight of businesses.
ICAB secretary Muhammad Imrul Quayes and member Snehasis Barua also spoke, among others, at the programme.