FBCCI again pleads for changes in fiscal measures

Doulot Akter Mala | Published: September 28, 2016 00:00:00 | Updated: February 01, 2018 00:00:00

Country's apex chamber body has urged the government to amend some of the key fiscal measurers for the fiscal year 2016-17 as it found small and medium-scale businesses facing difficulty in running their operations.
Officials said the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) pointed out that the tax measures created complexities and harassment in field-level business.
The federal body of country's trade chambers placed the plea by compiling proposals of 44 associations across the country, two months after the passage of the Finance Bill 2016. The proposal was placed in a meeting on September 8 with the finance minister.
The government has set a Tk 2.03-trillion tax-revenue-collection target for the current budget 2016-17, which is 83.69 per cent of the total revenue target of Tk 2.42 trillion.
Responding to the business community's demand, the finance minister recently forwarded the proposal to the National Board of Revenue (NBR) with an instruction for closely scrutinising the matter that involves a revision of the fiscal measures.
In the proposal, the FBCCI said major and sensitive proposals of the apex trade body regarding VAT measures have not been considered in the budget for FY 17.
"Package VAT system turned totally an ineffective measure for small and medium-scale business in the current FY," it said.
Turnover-tax facility has been scrapped in the metropolitan area while Tk 28,000 minimum amount of VAT has been fixed for businesses having annual turnover above Tk 8.0 million.
So, the shop-owners under package VAT system or turnover VAT facility cannot enjoy it.
The FBCCI proposed that rate of package VAT be kept unchanged like in the previous year and the rate be increased by 20 per cent per annum.
It also seeks 3.0 per cent turnover tax for businesses having annual turnover of Tk 3.6 million to Tk 50 million.
The government can levy 15 per cent VAT on businesses having turnover above Tk 50 million that has the ability to claim tax rebate. For others, VAT rate should be fixed at 4.0 per cent, the proposal said.
All of the businesses with trade licence that have business turnover from Tk 3.6 million to Tk 50 million must have VAT registration. Local VAT authority will ensure their VAT registration with the help of the trade associations and chambers.
The FBCCI said the proposal was placed with the government to help expansion of VAT network and make it business-friendly.
"Rate of VAT at the consumers' level will be reduced, ranging from 0.5 per cent to 4.0 per cent, from the existing 15 per cent if the proposal is considered by the government," it adds.
The FBCCI leaders also proposed a cut in VAT on service charge of repairing and servicing of motorized vehicles, transportation of goods other than energy products and information and communication technology.
Cuts in VAT rates for gold and silver jewelries, air conditioned hotels and restaurants, bar three-star ones and above, withdrawal of VAT on power loom, PVC pipe are also in the FBCCI package proposal.
It proposed VAT waiver for handmade bread valued above Tk 100 per kilogram and cake and plastic and rubber slipper above Tk 120 per pair.
Exemption of VAT deducted at source from export-oriented industry is also demanded. The FBCCI said imposition of VAT at higher rate on services sector crippled the relevant businesses.
The tax authority has to frame a specific policy to facilitate the taxpayers adjust the advance paid income tax in different sectors with the actual payable tax, it said. Â
On income-tax proposals, the apex trade body demanded withdrawal of advance income tax (AIT) on import of basic and intermediate raw materials. Alternatively, maximum one per cent tax could be imposed with the provision of adjustment.
It also proposed withdrawal of AIT on import of ingredients for poultry feed and sought waiver of 3.0 per cent tax at source on local letter of credit (L/C).
The apex chamber proposed withdrawal of VAT and income tax on indenting service. There is 7.5 per cent advance income tax and 15 per cent VAT on indenting commission.
"The tax may discourage remittance inflow in foreign currency," it said, adding that indenters export indenting services via proceed- realization certificate (PRC).
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