National Board of Revenue (NBR) chairman Mosharraf Hossain Bhuiyan Sunday said simplification of the relevant process is on to ensure that any dividend income is taxed only once.
The NBR is trying to find out a formula to avoid taxation of dividends that are transferred by the main or principal companies to their subsidiaries, said Mr. Bhuyian at a pre-budget meeting with the Metropolitan Chamber of Commerce and Industry (MCCI) at the Board premises.
Currently, tax is levied on dividend at every stage of distribution or transfer.
He hinted at the possible changes in relation to dividend taxation in the upcoming budget following a proposal mooted by the MCCI's tariff and taxation subcommittee chairman Hasan Mahmood.
In the meeting, the MCCI leaders proposed withdrawal of the provision of penalising an employer for non-submission of income tax return by an employee, withdrawal of the provisions of disallowances of perquisite paid to an employee in excess of Tk 4,75,000, increase in allowable expenses on royalty, technical knowhow etc from 8.0 per cent of disclosed profit to the actual account as certified by the invoice for the purchase of the relevant term, or at least 6.0 per cent of turnover as prescribed by Bangladesh Investment Development Authority (BIDA) and foreign exchange regulations of Bangladesh Bank (BB).
Responding to the proposal, the NBR chairman said the difference of allowable expenses rates will be rationalised to make it uniform in line with the BIDA and BB rules.
He also pledged to simply the penal provision for employers of non-submission of returns by their employees.
The MCCI leaders said the existing presumptive tax on transport sector can be addressed to expand the tax-base.
Following the proposal, the NBR chief termed the transport sector insiders a 'big group' and expressed his wiliness to look into the matter.
Golam Mainuddin, vice-president of MCCI and chairman of the British American Tobacco, Bangladesh, urged the NBR chairman not to impose heavy tax burden on large taxpayers to achieve target and meet the shortfall.
"It will be a difficult task for the NBR to meet the revenue shortfall worth Tk 175.12 billion until February in the next four months of the current FY," he said.
He also felt that the government should lay emphasis on issues relevant to economic development while framing the next national budget rather than focusing more on election.
"The government will have to lay emphasis on management of banking sector. Almost all the banks are facing liquidity crisis which may lead to serious problem in near future, if it is not addressed properly right now," he said.
He suggested reducing the taxes on basic raw materials and intermediate goods to make local industry competitive.
The MCCI leaders also proposed increasing the tax-free ceiling for individual taxpayers to Tk 4,50,000 from existing Tk 2,50,000, cutting the maximum tax rate for individual taxpayers by 5.0 per cent, expediting Public-Private Partnership (PPP) projects, considering the entire expenditure of Corporate Social Responsibility (CSR) as an allowable expenditure, reducing the tax rate of private limited companies by 5.0 per cent, banks and financial institutions, both listed and non-listed, by 2.5 per cent, merchant banks by 2.5 per cent, withdrawing the provision of payment of 10 per cent disputed amount of tax before appeal to the commissioner of taxes, increasing the limit of foreign travel expenditure to 2.0 per cent from 1.25 per cent of turnover, giving prospective effect to all changes by the finance act including tax rates, rationalizing stamp duty on land registration, increasing the tax-free ceiling of wealth surcharge etc.
Anis-Ud Dowla, chairman of the Advanced Chemical Industries (ACI) Limited, demanded withdrawal of advance trade VAT and Advance Income tax (AIT) on import of products for superstores.
NBR chairman said although it is an election year, the NBR would frame fiscal policy in line with that of the previous years.
"The expenditure plan of the finance division or allocation of resources for annual development programme (ADP) may have some reflection of an election year, but not the fiscal policy of NBR," he said.
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