The Institute of Chartered Accountants of Bangladesh (ICAB), in its budget reaction on Saturday, expressed fear that the government's dependency on bank borrowing will deprive the private sector.
"But it will not be negative, if the government can utilise the borrowed money properly," the accountants' body said in its reaction.
"If the government can properly use the money in development sectors, and the capital returns to the private sector after circulations, then its bank borrowing will not be negative," ICAB President Muhammad Farooq said in an online post-budget briefing.
In his speech, he said the proposed budget has a plan to borrow two times higher money than that of the previous year from the banking sector to meet past year's budget deficit.
ICAB apprehends that the government's bank borrowing will exceed the target in this fiscal year too.
However, ICAB supported the provision of widening the areas of investment for previously undisclosed income by paying taxes at lower rate in the proposed budget.
"In view of the current unusual situation, as an extraordinary measure, we find rationality in widening the areas of investment for previously undisclosed income by paying taxes at the lower rate," Humayun Kabir, past president of ICAB and Chairman of ICAB Taxation and Regulatory Committee, said in reply to a question.
He, however, said it is expected that this extraordinary measure will not be continued beyond the stipulated year.
ICAB also thinks that such moves will generate employment due to new investments and will also expand tax-net.
The professional body appreciated the government's move to impose penalty at the rate of fifty per cent on misinvoiced amount.
But it opined that such penalty will require judicious application at field level, so that normal business transactions are not arbitrarily valued for imposition of such penalty.
The accountants' body urged the government to review the provision of doubling source tax to 0.5 per cent from the existing 0.25 per cent for all export-oriented sectors in the upcoming fiscal year 2020-21.
Replying to a question, ICAB Member Snehashish Barua said mandatory filing of tax returns against tax identification numbers (TINs) will ultimately bring good by widening tax-net and ensuring compliance in tax system.
He expressed hope that the National Board of Revenue (NBR) will introduce one-page tax return form soon, so that there is no misunderstanding and hassle for common taxpayers.
ICAB said increasing disputed VAT deposit at the time of filing appeal to VAT Appellate Tribunal from 10 per cent to 20 per cent will pose a big burden for the business. It urged the government to keep it as it is.
The accountants' body said reduction of corporate tax rate from 35 per cent to 32.5 per cent is a relief for the local companies, and it will also encourage industrialisation and foreign direct investment (FDI) in Bangladesh.
Replying to a question in this regard, Mr Humayun Kabir said it is true that the measure will lessen gap between the corporate tax rates of listed and non-listed companies.
But he ruled out the possibility that it will discourage the non-listed companies to come in the capital market.
"The non-listed companies do not come in the capital market only for corporate tax rate, there are many other issues involved in this aspect."
Mr Kabir opined that setting the target of 8.2 per cent GDP growth is puzzling to many, in view of the current level of consumer demand (both global and domestic).
"It sounds unrealistic, particularly when IMF and OECD predictions are much lower (less than 2.0 per cent)."
He said another proposal, which imposed 2.0 per cent DTS on local LC transactions for essential goods, needs revision.
"It will push up commodity prices," he added.
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