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Govt making 'prospective tax measure' for investors

Stable tax rates for several yrs expected to help in making longer-term business plans, businesses say

Doulot Akter Mala | November 07, 2017 00:00:00

Government authorities are making 'prospective tax measure' providing for consistent tax rates for several years so that investors can make longer-term business plans.

Officials said this provision of foreknown stable tax rates is likely to be incorporated into the new income-tax law. The revenue authority is contemplating devising some of the stable tax measures in the new law for a relatively longer period.

The new income-tax law is scheduled to take effect, replacing the existing income-tax ordinance 1984, from the next fiscal year, 2018-19.

The draft of the new law may incorporate few such provisions for the sake of confident investment planning by entrepreneurs sans having to worry about how much they might be taxed for running future business operations.

Presently, the authorities are drafting the new income-tax law in Bengali and English. The draft law is likely to be uploaded onto the website in December for public perusal.

The NBR has started holding opinion-exchange meeting with the major stakeholders to compile and interpolate their opinions into the new law.

Recently, the board held a meeting with leaders of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI).

A senior official who is on the drafting committee said the new law would be sustainable for longer terms with recent and future trends in businesses and financial activity.

Frequent changes in the tax policy affect investors' business planning, he noted.

Many of the chambers and trade leaders several times urged the government to frame a stable tax policy for facilitating investors.

"We have already started making some stable tax policies during the last few years. Tax holiday and exemptions are given to the industries on the basis of specific period," the official said.

Corporate-tax rates ranging from 25 per cent to 45 per cent and tax threshold for individual taxpayers at Tk 250,000 remained almost unchanged during the last three years.

Consistencies in tax policies are one of the major tools to attract both local and foreign investors.

The new law on income tax is likely to focus on the issue at the directive of the government high-ups, the official said.

However, the new law would retain major provisions of the existing income-tax ordinance.

In the draft of the new law, international best practices would be incorporated along with global trend in business operations, clear provision for merger and acquisition, base erosion and profit shifting.

Humayun Kabir FCA, convener of the income-tax subcommittee of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), said it is a long-cherished demand of the investors to frame prospective tax rate for proper investment planning.

"If tax law changes every year, it may create problem in tax planning for taxpayers, especially corporate taxpayers," he said.

It is a positive step for investors and employment generation, he added.

Income tax presently comes into retrospective effect, he said.

However, there may be tendency of tax avoidance if corporate taxpayers know the tax rate, he added.

"There might be some fiscal changes if the government needs increased revenue for financing food import or other kinds of disaster management," he added.

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