The PricewaterhouseCoopers, Bangladesh, has identified inconsistencies in tax laws, including taxation on Alternative Investment Fund (AIF), capital gain and tax deducted at source in the distribution model.
The PwC has suggested addressing the areas bringing clarity in the legislation in the upcoming budget for fiscal year 2020-21.
It has placed the budget proposal in the National Board of Revenue on Tuesday with a number of recommendations on direct and indirect taxes.
The PwC also recommended crafting a mechanism to allow both non-resident individuals (with no work permit) and companies (with no local presence) obtaining electronic taxpayer identification number.
It has proposed to offer tax exemption on income generated by AIF as there are inconsistencies in the income tax law and paripatra of the income tax wing.
The multinational professional services network also proposed to introduce a separate computational mechanism of tax deducted at source (TDS) to determine taxes in distribution model.
"A suitable amendment may be considered in the legislation to match the utilisation of tax collected at source (TCS) under section 53 on the import of capital machinery with the corresponding utilisation of such capital assets…," the PwC said.
It has suggested removing double tax implication in the law for travel agents.
Considering practical situation, providing tax clearance information of employees by employers could be relaxed in case of the employees who leave an organisation before tax day, the PwC said.
The multinational entity also proposed insertion of a new section to bring clarity on the 'taxation of business or undertaking'.
The new section would prescribe a mechanism to compute the cost of acquisition of the business or undertaking. It also sought a provision in the law on amalgamation to cover carry forward of business loss of amalgamating entities and capital gain on transfer of assets.
Other proposals include calculation of disallowance threshold as percentage of net profit, amortisation or depreciation on intangible assets and depreciation on software classifying it 'Bangladesh made'.
The PwC said travel requirement may vary depending on the nature of business.
There may not be any restriction on allowability of overseas travelling expenses, so long as such expenses are related to the business or profession.
It recommended a clarification in the law whether the gratuity amount should be received from an approved gratuity funor not, to claim exemption.
The PwC said various classes of employees generally get different kinds of allowances or benefits.
A classification is needed on type of the allowances to be considered a part of the basic salary for determining value of the perquisites.
It also placed multiple proposals on the international part of direct tax as well as indirect tax.
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