The Metropolitan Chamber of Commerce and Industry (MCCI) Sunday proposed to the government to raise tax-exemption ceiling for individual taxpayers, continue tax holiday facility and reduce duty on industrial raw materials and intermediate products in the upcoming budget. The executive committee (EC) members of the leading chamber body, led by its President Amjad Khan Chowdhury, placed detailed proposals to the National Board of Revenue (NBR) chairman on the board premises. Anis A. Khan, chairman of MCCI tariff and Taxation sub-committee explained the proposals to the revenue board officials. The chamber suggested to the government to cut corporate tax rates and raise tax ceiling for individual tax payers. It has proposed to cut duty on capital machinery to 1.5 per cent, basic raw materials to .5 per cent, intermediate raw materials to 7.5 per cent and semi-finished products and finished products to 20 per cent. "The tax exemption limit for individual tax payers which is now Tk.1,65,000- should be raised to Tk. 2,50,000- in view of the spiralling cost of living," the MCCI proposal said. The Chamber recommends that the government take a policy decision to gradually reduce the highest corporate income tax rate to 20 per cent over the next five years from current rate of 42.5 per cent. It also strongly suggested to the government to remove divergence in income tax rates between companies and individual taxpayers. ".Companies deserve to be treated like any other corporate tax payers. As far as the Chamber is aware, such a differentiated rate of taxation is not applied to companies of this nature in neighbouring countries," it said. The chamber also proposed to reduce the highest rate of individual taxpayers to 20 per cent from 25 per cent. "The Chamber feels that reduction in the highest rate of tax will encourage individual assesses to declare higher income than what they do now and hence tax evasion will be minimized," the proposal added. It said the tax holiday scheme, scheduled to expire in June 2011, should be continued and allow more members of the potential sectors to enjoy the facility. The chamber has proposed to withdraw the provision of imposing 3.0 per cent tax on premium over face value of a company. "When a company raises its share capital at a value in excess of face value, the company shall be taxed on the premium over face value at the rate of 3.0 per cent. We strongly recommend withdrawing this provision," it said. The chamber leaders also proposed to facilitate transfer of technical know-how by reducing royalty and technical fee to 6.0 per cent from 8.0 per cent of the sale instead of profit. In the existing income tax law, any amount to be paid as Royalty or Technical Fee exceeding 8.0 per cent of profit is to be treated as inadmissible expenses. "This clause needs to be reviewed as it increases the effective tax rate and contradicts the foreign exchange regulation and Board of Investment Guidelines on Investment," it said. It suggested withdrawal of tax from transfer of securities or mutual fund units by sponsor shareholders of a company. The MCCI suggested to increase the allowable perquisite to Tk. 0.5 million from Tk. 0.2 million. "It may be noted that currently most allowances paid to an employee except a very few i.e., festival allowance, incentive bonus etc. are taxed again at company tax rate as inadmissible perquisite. These allowances are part of salary structure of an organization and taxed at source before making payment to the employee. So an allowance taxed in the hands of the employee should not be treated as inadmissible expense and the employer taxed again," the proposal said. It also proposed to reduce tax of freight forwarder, courier services and rationalize tax on gross profit. The MCCI also proposed to reduce Advance income tax (AIT) on import to 2.0 per cent from 5.0 per cent. It has sought tax-exemption on agro-based industries for next five years that expired in June 2008, and expand the net for tax holiday for agro-processing industries. The Chamber also suggested that the ceiling of tax-free house rent allowance should be refixed at 65 per cent from 50 per cent of basic salary or 25,000- per month. It also recommended withdrawal of the provision for excess profit tax on bank and reduction of tax on off-shore banking units. MCCI also proposed to cut discretionary power of deputy commissioner of taxes in the computation of income, lumsump on trading profit and profit on sale of fixed assets. It also suggested to the government to remove roadblocks on tax credit of the advanced paid tax The Chamber recommended that investment of monies from superannuation or pension fund, provident fund and gratuity schemes be allowed to be invested in fixed deposit in commercial banks and non-bank financial institutions. The chamber strongly suggested continuation of the Pre-shipment Inspection (PSI) system, discontinue truncated-base VAT collection system, reduction of Supplementary Duty (SD) on milk production. The MCCI proposed to treat agro-based industries equally like pharmaceuticals, waive duty on agriculture tractor. On Value Added Tax (VAT), the MCCI proposed to withdraw deduction at source tax, introduce simplified and single register for small businesses and withdraw VAT on private education and cellular phone inputs. The Chamber suggests that in line with the practice in countries with good VAT practices, the system of submission and approval of price declaration be discontinued. It also suggested withdrawal of VAT on milk and milk products, cut discretionary power of VAT officials. The MCCI urged the government to audit the business houses only by relevant authorities and avoid duplications of audit. The chamber strongly recommended the NBR on discontinuation of approval of price declaration system, introduction of central and automatic VAT registration system. "The Chamber strongly recommends that central registration of VAT with one VAT identification number be restored for manufacturer with selling activities," the proposal said. The MCCI proposed to withdraw SD on motorcycle, paint and varnishes and fruit juice. The Chamber suggests that individual tax exemption ceilings should be re-fixed to Tk. 3, 00,000 for female and senior citizen and Tk. 3,25,000 for handicapped persons from existing Tk 1,80,000 and 2,00,000 respectively.
© 2026 - All Rights with The Financial Express
