Exporters decry heavy tax burden on cash subsidies
Sunday, 24 April 2011
Doulot Akter Mala
The country's leading exporters decry heavy tax burden on cash subsidies that the government provides to some selective sectors to remain competitive in the international market. Exporters said they have to pay 37.5 per cent corporate tax on cash subsidies from the current fiscal, as the subsidised amount is considered as an income of company. The government waived 5.0 per cent tax at source, which was the final tax, on cash subsidy in the Finance Bill 2009, following requests of the exporters. However, the amount is added with the income of the exporters, industry insiders said. The former president of the Bangladesh Chamber of Industries (BCI), Shahedul Islam said the exporters of jute goods are able to survive in the global market with the government-provided cash subsidies. Mr Islam, a leading exporter of jute goods, is the former chairman of Bangladesh Jute Goods Association (BJGA). The exporters are facing strong competition in the global market due to higher production cost of jute goods, he said. "It is not fair. The government waived tax on cash subsidies, following requests of the exporters. But, it indirectly imposed higher tax on them," he said. The government should waive the tax in the upcoming budget, and make the waiver effective with a retrospective effect from July 2009, he told the FE Saturday. Former president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Fazlul Huq said the government should waive all taxes from the export subsidies. "We are facing another problem in receiving the cash subsidies, as some tax offices calculate the amount directly as profit, and cut corporate tax on it," Mr Huq said. The issue has been raised in a recent meeting with the NBR, and the authorities also accepted that calculating the subsidy as profit was wrong. "Cash incentives from the government are the major sources of earning of our industry. We cannot survive without the cash support of the government," he said. The government introduced the cash incentive for the leading export-earners to help them stay competitive in the international market. Talking to the FE Saturday, a senior official of the NBR, who deals with income tax policies, said: "Its true that the exporters have to pay tax at a higher rate than before on cash subsidies." The revenue board might review this issue in the upcoming budget, he said. The government in two phases released Tk 18.5 billion cash subsidies for the exporters, out of the Tk 20 billion packages, allocated in the current budget for the recession-hit sectors. The jute exporters have received Tk 1.50 billion from the budget allocation of Tk 3.0 billion. The leading exporters expressed optimism that they would be able to overcome the financial constraints, as the government disbursed the major portion of the cash incentives in March.
The country's leading exporters decry heavy tax burden on cash subsidies that the government provides to some selective sectors to remain competitive in the international market. Exporters said they have to pay 37.5 per cent corporate tax on cash subsidies from the current fiscal, as the subsidised amount is considered as an income of company. The government waived 5.0 per cent tax at source, which was the final tax, on cash subsidy in the Finance Bill 2009, following requests of the exporters. However, the amount is added with the income of the exporters, industry insiders said. The former president of the Bangladesh Chamber of Industries (BCI), Shahedul Islam said the exporters of jute goods are able to survive in the global market with the government-provided cash subsidies. Mr Islam, a leading exporter of jute goods, is the former chairman of Bangladesh Jute Goods Association (BJGA). The exporters are facing strong competition in the global market due to higher production cost of jute goods, he said. "It is not fair. The government waived tax on cash subsidies, following requests of the exporters. But, it indirectly imposed higher tax on them," he said. The government should waive the tax in the upcoming budget, and make the waiver effective with a retrospective effect from July 2009, he told the FE Saturday. Former president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Fazlul Huq said the government should waive all taxes from the export subsidies. "We are facing another problem in receiving the cash subsidies, as some tax offices calculate the amount directly as profit, and cut corporate tax on it," Mr Huq said. The issue has been raised in a recent meeting with the NBR, and the authorities also accepted that calculating the subsidy as profit was wrong. "Cash incentives from the government are the major sources of earning of our industry. We cannot survive without the cash support of the government," he said. The government introduced the cash incentive for the leading export-earners to help them stay competitive in the international market. Talking to the FE Saturday, a senior official of the NBR, who deals with income tax policies, said: "Its true that the exporters have to pay tax at a higher rate than before on cash subsidies." The revenue board might review this issue in the upcoming budget, he said. The government in two phases released Tk 18.5 billion cash subsidies for the exporters, out of the Tk 20 billion packages, allocated in the current budget for the recession-hit sectors. The jute exporters have received Tk 1.50 billion from the budget allocation of Tk 3.0 billion. The leading exporters expressed optimism that they would be able to overcome the financial constraints, as the government disbursed the major portion of the cash incentives in March.