A reversal of decision may allow Members of Parliament (MPs) to enjoy the duty-free facility for import of cars in the upcoming fiscal year too though the finance minister proposed nominal taxes.
Following legal complexities, the budget proposal to phase out the blanket tax benefit for lawmakers may not be approved by parliament for now, sources said.
Also, tax holiday for investors in hi-tech parks may continue in the upcoming fiscal year, so may the zero-rated duty on import of capital machinery for hi-tech parks and economic zones.
The decisions on bringing changes in the proposed tax measures for the FY2024-25 got the nod from the Prime Minister on Tuesday in a meeting with the National Board of Revenue (NBR) high-ups, the sources said.
The Finance Bill 2024 with the amendments is set to get through the parliament tomorrow (June 27).
Placing the budget proposals on June 6, 2024, Finance Minister Abul Hassan Mahmood Ali requested the law ministry to make provision for phasing out the tax bounty.
He made the appeal after the law ministry had rejected a proposal levying 25-percent customs duty and 15-percent VAT on vehicles imported by lawmakers.
"Presently, exemption of all types of customs duties and taxes exists on import of one car or jeep or microbus by the honourable Members of Parliament. We are encouraging everyone to pay taxes and to come out of the culture regarding tax exemptions. A noble example will be set if public representatives amend this privilege and lead everyone to come out of the tax-exemption culture," the finance minister told the House.
"An amendment to the relevant order can be made to help achieve this goal. I am requesting the honourable minister concerned to make necessary amendments to the Members of Parliament (Remuneration and Allowances) Order 1973 accordingly," the new custodian of exchequer said while rolling out the proposed budget for FY25.
A senior official of the NBR says the parliament secretariat needs to amend the Presidential Order 1973 containing the MPs' privileges in order for taxing them.
"The NBR imposes taxes through Statutory Regulatory Order (SRO) which cannot supersede any law," he adds.
Officials have said despite several allegations, proposal on black-money- whitening facility for both companies and individuals on payment of 15-percent tax may remain unchanged.
Official sources say though the taxmen were not in favour of offering the scheme for individual taxpayers this time, it may get consent of the parliament.
Tax-holiday facility and zero-rated duty on import of capital machinery for private economic zones and hi-tech parks may continue in the next FY, they add.
While laying the budget for the upcoming fiscal year, Finance Minister Mr Mahmood Ali proposed to phase out tax waivers for only private EZs and hi-tech parks. However, the state-run hi-tech parks and economic zones have been kept under the purview of tax breaks.
In the budget proposal, the finance minister wanted to scrap the tax-holiday facility for 10 years
Paban Chowdhury, former Executive Chairman of Bangladesh Economic Zones Authority (BEZA) and incumbent chief adviser of City Group, feels that bundling out the given benefits has both immediate and long-term impacts on foreign direct investment. "We need to attract investment in Bangladesh offering some benefits which have also been given in the Bangladesh EZ Act 2010," he says.
The baits for EZ are not specified for public or private EZs so there is no scope to treat differently, he adds.
"Such proposal may erode investors' trust as they have invested following the government commitment on tax benefit," he notes. The proposal on imposing capital-gains tax on individual investors in shares, worth above Tk 5.0 million, would remain unchanged despite having strong demand for withdrawal.
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