The Financial Express

FBCCI seeks major reform in tax regime

| Updated: June 14, 2021 18:14:49

Illustrative photo Illustrative photo

The country's apex trade body has demanded bringing a major reform in the country's tax regime as it sought separation of the tax collection and policy wings to ensure time-befitting tax measures.

As part of the reform, it suggested shifting the authority of framing fiscal measures from the National Board of Revenue (NBR) to Bangladesh Trade and Tariff Commission (BTTC).

The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) suggested bringing the BTTC under the Internal Resources Division (IRD) of the Ministry of Finance.

The BTTC would then be able to act as an executive regulatory authority like other regulatory commissions, it argued in a post-budget proposal.

The federation chamber recently sent the proposal to finance minister AHM Mustafa Kamal and NBR chairman Abu Hena Md Rahmatul Muneem and requested for their appointment to discuss the issues.

It also referred to an NBR order issued in 2008 as well as budget proposals in this regard it had submitted in 2009, and demanded its immediate implementation.

The trade body suggested forming a National Trade Facilitation Commission by empowering the BTTC to reform tax measures and rationalise the tax structure. Currently, the BTTC is a wing under the ministry of commerce (MoC).

The FBCCI demands, prepared on the basis of the proposed budget for FY2021-22, also included short, medium and long-term fiscal measures.

To empower the BTTC, the FBCCI has recommended a number of authorities including framing fiscal measures in the national budget every year through holding consultation with the businesses, risk management, audit, inspection, tax reform and training, alternative dispute resolution, national single window, tax refund and other tax incentives for export-oriented sectors and deal with the international trade measures.

The BTTC will also be empowered to bring the ratio of indirect and direct tax to35:65fromexisting 65: 35through addressing consumers' rights, ensuring a balanced tax system and focusing on continuing with the upward trend of productivity.

The FBCCI also suggested the government to discuss fiscal measures, as per relevant section of the Trade Facilitation Agreement of the World Trade Organisation (WTO) rectified by Bangladesh, with the businesses before imposing or amending any income tax, VAT and customs duty.

The tax measures should be made public by giving the businesses sufficient time prior to making the Finance Bill effective, it said.

To enhance tax compliance, the trade body proposed to make submission of evidences or documents of tax payment mandatory for obtaining different services from public and private sector along with the current provision of submitting Taxpayers Identification Number (TIN).

It also recommended the government to frame rules so that trade and chamber bodies, state-owned licencing and regulatory authorities and relevant banks can work jointly with the tax authority to bring different professionals having taxable income under the tax net.

The FBCCI said that the government should not impose the fiscal measures arbitrarily. Rather, the measures will have to be finalised through a committee comprising private sector representatives and other stakeholders concerned.

The chamber body has proposed to restructure the import tariff, continuation of regulatory and supplementary duty, limit import duty on basic raw materials, intermediate goods between 1.0 per cent and 5.0 per cent, intermediate raw materials produced locally (at least 25-30 per cent) to 10 per cent, import of machinery and parts of the VAT registered manufacturing units to 1.0 per cent and consider lowest prices at the time of customs assessment of the imported goods.

It suggested collecting tax only on the accounting profit of the taxpayers that could be adjusted with the actual payable tax, withdraw 20 per cent Advance Tax on import and impose Advance Income Tax at 3.0 per cent for commercial importers.

The businesses are paying source tax on a product for several times which prompt them to conceal actual business transaction, it said.

The source tax is applicable at 3.0 per cent rate on the local letter of credit, 5.0 per cent on L/C commission and 5.0 per cent on value of imported products.

It is difficult to get refund of the paid tax or adjust it, said the FBCCI.

The FBCCI also proposed to bring down the corporate tax rates for banks, insurance and other financial institutions to 35 per cent from 37.5 per cent.

Talking to the FE, FBCCI president Md Jashim Uddin said they have started working on the fiscal measures on the basis of the proposed budget, placed on June 3, 2021 in parliament.

It is unfortunate that the working groups, standing committees, sub-committee on tax and VAT of FBCCI remained inactive for long, he said, adding that there was no fruitful discussion on the fiscal measures prior to the budget proposals.

He said this type of discussion should be continued round the year.

[email protected]

Share if you like