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PM apprised of NBR tax hike, tax cut packages

DOULOT AKTER MALA | May 15, 2024 00:00:00

Mobile-phone talk may get costlier as the revenue authority is said to have received prime minister's nod to impose higher tax on phoning in a package of fiscal measures.

The National Board of Revenue (NBR) is bent on increasing the Supplementary Duty (SD) on mobile talk-time, including its use of internet data, in the budget for FY 2024-25, official sources said.

Currently, there is 15-per cent supplementary duty on mobile-phone talk-time which VAT authority imposes on 15-percent VAT.

The proposed measure has been finalised for upcoming budget after the revenue authority met Prime Minister Sheikh Hasina Tuesday with those fiscal plans.

They gave a presentation on new income tax, VAT and customs measures for FY 2025.

Officials of the NBR said the PM also approved some other proposals, including keeping the tax-free ceiling for individual taxpayers unchanged, cut in corporate -tax rate for non-listed companies by 2.5 per cent by tagging conditions, imposing taxes at 15 per cent on capital gains derived by individual investors from share market, imposing VAT on MRT ticket, upward revision of tobacco taxes, an increase in taxes on sugar-based items and laying more focus on automation.

In the meeting, the PM also approved NBR proposal to increase the highest tax slab to 30 per cent for the well-off taxpayers having above Tk 5.0 million in annual income.

Duty-free benefit on import of vehicles by Member of Parliament might be phased out by imposing 25-percent customs duty.

However, Supplementary Duty (SD) at a rate of 500 per cent would remain exempted, officials said.

Officials said the PM agreed on continuing the tax benefit for ITES sector in a modified way while ruled out a proposal to reduce turnover taxes to 0.3 per cent from the exiting 0.6 per cent for e-commerce.

Officials said there would be no new exemption of VAT in the upcoming FY while around 20 fully exempted items, out of 600, would see a nominal tax.

The NBR would bring down supplementary duty and regulatory duty on some products to cut protections and make local industry export-competitive.

"The PM has instructed the revenue board to devise fiscal measures to curb food inflation that increased (point-to-point) to 10.22 per cent in April 2024 against 9.87 per cent in March," said one official.

Officials familiar with the budgeting exercise said the SD rate on mobile usage or talk-time might go up to 20 per cent in the next FY as the sector can generate a big chunk of revenue promoting austerity among the mobile-phone users.

"The NBR has no way but to find ways to increase country's tax-GDP ratio following the country's dire need for domestic revenue," he added.

Mohammed Shahedul Alam, Head of Corporate and Regulatory Affairs of ROBI Axiata, says upward revision of taxes may not help the government to generate more revenues as people would cut their mobile expenditures due to higher taxes.

"Already, consumption of mobile-phone usage has been reduced to 3.0 to 4.0 per cent during the last two quarters of the current FY, which was 11 to 12 per cent earlier," he adds.

Currently, total tax incidence on mobile-phone talk-time and data is a steep 33 per cent.

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