FBCCI for wider tax cuts to avert evasion, capital flight

The apex chamber has prepared its budget proposals for the government to raise income-tax threshold to Tk 300,000 and consider wider tax cuts to avert evasion and capital flight.
It seeks reduction in high rates of corporate tax and minimum tax for individuals in the budget for fiscal year (FY) 2016-17.
The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) has made a strong plea for scrapping the system of wealth surcharge on net asset that has been accumulated from taxed income
Its proposals are scheduled to be placed in the meeting of budget consultative committee today (Thursday).
"Considering high cost of living and inflation, tax ceiling for individuals should be increased," the FBCCI says.
The apex chamber proposes Tk 325,000 as the ceiling for women and senior citizens above 65 years, Tk 400,000 for mentally and physically challenged people and Tk 450,000 for injured freedom fighters.
It also seeks to see Tk 3,000 as minimum tax for individual taxpayers, irrespective of areas.
Tax on publicly traded companies should be reduced to 23 per cent while non-publicly traded companies 28 per cent and non-publicly traded non-manufacturing companies 33 per cent, it says.
Currently, tax on publicly traded companies is 25 per cent while 35 per cent for non-publicly traded companies.
The FBCCI proposed 40.5 per cent corporate tax for non-publicly traded banks and financial institutions while 38.5 for publicly traded banks and FIs. The two rates are currently 42.5 and 40 per cent respectively.
For merchant banks, it proposes that the tax rate be cut to 35 per cent from the existing 37.5 per cent.
"The corporate tax rates should be fixed at tolerable levels to encourage investment. People will also be encouraged to show actual income of a company to the taxmen," the  federation of chambers says in support of its proposals for tax cuts.
Recently, neighbouring India set a target to bring down its corporate tax rate to 25 per cent in phases from 30 per cent. Sri Lanka and Pakistan also have lowered their rates below Bangladesh's.
The FBCCI proposed that the government cut the corporate tax rate to 30 per cent to reduce the difference between the highest slab of individual tax -- 30 per cent -- and the rate of corporate tax.
  It also seeks withdrawal of the provision of excess profit tax in the income tax ordinance. According to section 16C, bank companies have to pay 15 per cent tax in case of gaining profit 50 per cent higher than its capital.
The chamber body proposes keeping a provision of investment of legally earned undisclosed income in purchase of flat by reintroducing section 19 BBBBB to check capital flight and investment in second home abroad.
The opportunity should be offered for at least five to 10 years on indemnity to help the real-estate sector overcome the current crisis.
"Notwithstanding anything contained in this Ordinance or any other law for the time being in force, no question as to the source of any sum invested by any person in the construction or purchase of any building or apartment shall be raised if the assessee pays, before the assessment is completed for the relevant assessment year, tax at the rate…" says the FBCCI proposal.
The apex chamber proposes reintroducing special corporate tax rate for apparel sector at 10 per cent, cut in advance income tax on import of basic industrial raw materials, withdrawal of minimum tax for companies, irrespective of profit and loss, not auditing universal self-assessment tax files every year without specific allegation, addressing bottlenecks to Alternative Dispute Resolution (ADR) etc.
On VAT-related proposal, the FBCCI recommends amending the VAT and Supplementary Duty (SD) Act 2012 in line with the recommendation of the joint committee of the National Board of Revenue (NBR).
The chamber proposed 15 per cent VAT on value addition instead of total sales price, increasing VAT-free turnover threshold to Tk 3.6 million and levying 3.0 per cent turnover tax at production stage for businesses having annual turnover above Tk 3.6 million to 15 million.
 On customs-related matters, the FBCCI proposed that the new customs law be enforced from the upcoming financial year.
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