Business leaders urge the government to grant relief from excessively high bank interest as they find current borrowing costs as an unbearable burden for industries already weakened by rising operational expenses.
They also seek exemptions from advance income tax (AIT), describing the National Board of Revenue's Tax Deducted at Source (TDS) as a form of "tax terrorism" that squeezes businesses irrespective of profit or loss.
Such concerns were raised Thursday at a dialogue organised at the headquarters of Bangladesh Investment Development Authority (BIDA) in Agargaon, Dhaka. More than a hundred business leaders and industrialists from different sectors participated in discussion.
Besides fiscal reforms, participants demand uninterrupted gas supply to factories, strengthened law and order, faster regulatory approvals, better management of Dhaka's chronic traffic congestion and improved airport operations.
Several business leaders also called for deferring Bangladesh's LDC graduation by at least three years, arguing that the economy is not yet prepared for the heightened global competition that will ensue.
Energy Adviser Muhammad Fouzul Kabir Khan, Chief Adviser's Special Envoy Lutfey Siddiqi, Bangladesh Bank Governor Ahsan H. Mansur, NBR Chairman Md Abdur Rahman Khan and BIDA Executive Chairman Chowdhury Ashik Mahmud Bin Harun responded to the issues raised by the business community.
Apex Footwear Managing Director Syed Nasim Manzur told the meet that the combined burden of AIT and TDS now becomes "tax terrorism" for entrepreneurs. "This must stop. Whether we make a profit or incur a loss, we continue paying taxes in all circumstances. There have been instances where we suffered heavy losses yet paid more in taxes. We want relief from this."
Meghna Group Chairman and Managing Director Mostafa Kamal echoes the concerns, alleging harassment related to TDS deductions.
"There is no duty on the import of finished chemicals. Yet, at the production stage, we must pay an additional 2.0-percent advance tax. This puts domestic producers at a competitive disadvantage," he points out.
In Bangladesh, TDS is deducted from a company's turnover rather than its profit, and in many cases the deducted amount is neither refundable nor treated as an advance payment. As a result, the effective tax burden - theoretically set at 27.5 per cent - often climbs to 30-45 per cent.
The NBR Chairman, Md Abdur Rahman Khan, acknowledged significant structural flaws. "Globally, TDS is considered a painless system, but in Bangladesh the main issue is the lack of adjustments and an extremely complicated refund process," he says.
He admits that many taxpayers have TDS deducted despite having no taxable income. "Yet we do not provide refunds, and that is a serious flaw in our system."
High borrowing costs also featured prominently in the dialogue. Nasim Manzur stated that interest rates in Bangladesh are far higher than in competing economies.
"We can no longer absorb these costs. Our cost of doing business has soared, making it difficult to compete with Vietnam and India," he told the cutting-edge dialogue on the current state of business and economy.
Bangladesh Bank Governor Ahsan H. Mansur says interest rates can be reduced only if inflation falls to around 5.0 per cent within this fiscal year.
"Expecting low interest rates amid high inflation is unrealistic," he told his business audience.
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