Many beneficiaries of tax largesse offered by the past regime for indefinite period are among those losing out under a current trimming that limits waivers to maximum five years.
Officials say the government's revenue authority has started implementing Sunset Clause-like measure setting maximum five-year tenure of tax exemptions.
Already, six tax-exemption statutory regulatory orders (SROs) have been scrapped by the income-tax wing of the National Board of Revenue (NBR).
Sunset Clause is a mechanism on global practices in the public-policymaking domain with various historical precedents that define the end-date of a law or tax benefit.
Officials have said following sunset clause for tax-breaks is one of the major conditions of development partners for providing credit support to the government.
Under the initiative, six new SROs were issued last week cancelling tax exemptions beyond five years as well as those having no timeline to end.
Tax waivers for Bangabandhu Memorial Trust and President Abdul Hamid Foundation stand scrapped through the trimming of the fiscal- immunity provisions.
Also, tax benefit for the Centre for Research and Information (CRI) run by Radwan Mujib Siddiq Bobby, son of Sheikh Rehana, has been done away with. It was for unlimited period.
Furthermore, Shurer Dhara of music-artist Rezwana Chowdhury Bonnaya and Lalit Mohan-Dhanbati Memorial Foundation of Justice SK Sinha's parents would no longer enjoy the tax-breaks.
The tax bounties for Shurer Dhara, Lalit Dhanbati and Wadud Bhuiyan Scholarship and CRI were given for unlimited period.
Tax exemption for Wadud Bhuiyan Scholarship Trust has also been withdrawn.
A senior tax member says the NBR is trimming all tax exemptions above five years to cut down tax expenditures in line with the development partners' conditions to increase the tax-GDP ratio in the country.
"You can see none of the tax exemptions come above five-year tenure. In case of Grameen Bank, As Sunnah Foundation and July Shahid Srimiti Foundation, the NBR has also followed the timeline too," he adds.
Tax exemptions for Bangabandhu Memorial Trust and President Abdul Hamid Foundation were given for 10 years in 2018 and 2019 respectively.
Before the timeline expires, the NBR has scrapped the benefits in compliance with the timeline set in the sunset clause.
The past government had offered the tax exemptions on various incomes of those entities which, according to the taxmen, were mostly under "political considerations". The officials said under a fiscal-reform package they would frame a legal Sunset Clause to enable investors to project their cost of doing business knowing when their tax-cut benefit ends.
Though the timelines for many of the sectors have been defined in the budget to end tax exemptions, the NBR often has to extend those every year following requests from influential quarters, revenue officials say. Many of the sectors have been enjoying tax-breaks or pared-down tax rates for long, including incomes from poultry, fisheries, and apparel, without having any deadline.
Income from fisheries becomes one of the popular sources of disclosures on wealth by many of the tax-evaders as none can measure the volume of fishes in a ditch or pond. With the help of such clauses, the government can project when the foregone revenue on account of tax-breaks would be added to the public exchequer.
Earlier, three of the revenue board's wings had prepared their respective tax-expenditure reports following conditions set by the International Monetary Fund (IMF) that is bankrolling budget deficit.
Value-added tax (VAT) expenditure could amount to roughly 3.26 per cent of GDP in 2022. Direct-tax expenditure was 3.56 percent of total Gross Domestic Product for FY21. The customs wing has counted the lowest tax expenditure, at 0.76 per cent of the GDP, in FY 2022-23.
Government's failure to cut tax expenditures to the expected level is seen as one of the reasons for the IMF not disbursing full funds from its agreed loan package earlier.
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