Tk 150b in tax revenue stuck up in litigation process

International Chamber of Commerce, Bangladesh (ICC,B), Monday proposed to the revenue board to incorporate a law to settle tax-related cases out of the court through arbitration. Currently, an amount of about Tk 150 billion in tax revenue is stuck up in the court due to disagreement between taxpayers and revenue authority on determining actual payable tax. The country's first arbitration body -- Bangladesh International Arbitration Centre (BIAC) - was launched Saturday with the initiative of ICC,B. Dhaka Chamber of Commerce and Industry (DCCI) and Metropolitan Chamber of Commerce and Industry (MCCI) are two other sponsors of the body. The ICC,B president Mahbubur Rahman, who is also chairman of the BIAC, said the chamber bodies are willing to work together with National Board of Revenue (NBR) to settle those cases. ICC,B, members and the country's leading businessmen R. Maksud Khan, A.S.M Quasem, Mamun Rashid and Fazlul Hoque also attended the meeting. He said the huge amount of revenue remains stuck up because of pending cases in customs department which can be settled out of the court through BIAC. Responding to the proposal, NBR chairman Dr. Nasiruddin Ahmed said the revenue board has finalised the rules of Alternative Dispute Resolution (ADR), which might be placed before parliament by June. He said the NBR is also willing to settle the pending cases out of the court to realize the blocked revenue. The ICC,B president raised the issues at a pre-budget meeting with the NBR. The chamber has placed a 16-point proposal in the board including taking advantage of BIAC and raising exemption ceiling for individual taxpayers. The chamber leader urged the revenue board to raise exemption limit of tax-free income for individual taxpayers to Tk 2, 40,000 from existing Tk 1,65,000, considering significant increase in daily life expenditures. The NBR chairman also realized the need for raising existing tax-exemption threshold for individual taxpayers. It also proposed to reduce corporate tax rates to 20 per cent for listed companies and 30 per cent for non-listed companies from existing 27.50 per cent and 37.50 per cent respectively. On property tax, the ICC,B, president said people own properties by saving money from their income, for which they pay taxes. The government should not impose additional tax on property, he said. Another member of ICC,B, A.S.M Quasem proposed to the NBR to consider 10 per cent tax at source deducted from fixed deposit receipts (FDR) and saving certificates as final tax. He proposed to the NBR not to charge any taxes on those incomes further. On submission of quarterly returns of Value Added Tax (VAT) by exporters, who are enjoying zero rates, Mr Quasem said the rules should be simplified by allowing exporters to submit returns annually instead of quarterly. Fazlul Huq, former president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and ICC,B member, proposed to include knitting and dyeing sector under the list of tax beneficiaries of the garments sectors. He also proposed to the government not to cut tax on income of exporting companies considering the 5.0 per cent cash incentives as profit. The ICC,B, president also urged the NBR to reintroduce the provision for investment allowance for BMRE (balancing, modernisation, replacement and expansion). The investment allowance for BMRE was scrapped two years ago. The chamber leaders also proposed to fix a minimum tax of Tk 2,500 for all taxpayer identification (TIN) holders including doing business, irrespective of size, place, volume, profit etc. They also proposed to reduce maximum tax rate to 20 per cent from existing 25 per cent and VAT rate for private companies to 10 per cent from 15 per cent. The chamber leaders proposed to give tax-exemption to the dividend income earned from investment in shares of public limited companies listed with stock exchanges. Companies, paying dividend up to Tk 1,00,000 to the shareholders, should be exempted from payment of advance income tax, the chamber leaders suggested. The chamber leaders also proposed to introduce bank guarantee instead of cash deposits of 10 per cent to the appeal tribunal to help companies in case of shortage of working capital. They also sought tax exemption for off-shore banking units on its profit. To face the growing energy crisis, the ICC,B proposed to waive duty on import of diesel, that will be used on captive and standby generators of industries. The chamber leaders said industries are now using natural gas, which is depleting fast. They also proposed to extend tax holiday up to 2015 and appointing more pre-shipment inspection companies (PSI) in each zone. NBR member Aminur Rahman, who heads the income tax policy wing, said companies are evading taxes in two ways by showing higher expenditures for employees' salaries. On the other side, employees are not showing actual salaries to evade tax. He said the tax-exemption ceiling has been set on the basis of per capita income of $700 and daily expenditure ratio. ICC,B member Mamun Rashid, who is chairman of ICCB standing committee on banking technique and practice, proposed to the government to raise the limit of tax-free income for women taxpayers to increase their growing contribution to the economy. He proposed to the NBR to form a tax consultation committee to ensure participation of all types of taxpayers on preparation of tax policies.