FBCCI opposes property tax, favours cut in corporate tax rates
Monday, 25 April 2011
FE Report
The country's apex chamber Sunday urged the government to raise tax-free threshold for individual taxpayers to Tk 2,25,000 and reduce import duty on capital machinery, basic and intermediate raw materials in the upcoming budget for 2011-2012. The tax-free income slab is now Tk 165,000. The leaders of the leading chamber body the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), proposed reduction in duty for capital machinery and basic raw materials to 1.0 per cent from existing rates of 3.0 per cent and 5.0 per cent respectively. The FBCCI also proposed a cut in duty on intermediate raw materials (not produced locally) to 3.0 per cent from 12 per cent. It has proposed extension of the tax holiday facility until 2015. The facility is scheduled to expire on June 30 next. A 12-member delegation of the chamber body comprising its president AK Azad, first vice president Jashim Uddin, former president Salman F Rahman, electrical association president Abdur Razzak, FBCCI adviser Manjur Ahmed and director Abdul Huq placed a written proposal before the National Board of Revenue (NBR) in a pre-budget meeting. Mr AK Azad proposed that the NBR withdraw advance income tax (AIT) and advance trade VAT (ATV) on import of basic raw materials and capital machinery. He said the FDI (foreign direct investment) in flow has declined significantly. The trend could be reversed with the tax holiday facility. Mr. Azad requested the NBR chairman to repeal the existing law that empowered taxmen to send taxpayers to jail. "The 'black law' was abused by the caretaker government to harass businessmen. It should be repealed," he said. There are sufficient measures in the tax laws to punish tax evaders, including freezing of bank accounts, he said. "The criminal law should not be imposed on taxpayers. It is a tool for harassment," he said. Salman F Rahman said tax benefit should be provided to the companies on the basis of percentage of shares off-loaded in the stock market. "Grameenphone off-loading only 10 per cent shares is enjoying the tax benefit equivalent to that of Beximco which has off-loaded 60 per cent of its shares," he said. He made a plea to the NBR not to disclose information on taxpayers to any department, in violation of law. He also suggested full tax waiver for agriculture, textile, garments, electrical and electronics manufacturing industries on import of raw materials, ingredients and some components. The chamber leaders said the FBCCI suggestions, if implemented would help the country attract foreign direct investment and encourage joint venture investment with local companies. The chamber leaders criticised the newly proposed property tax describing it as double taxation on the tax-paid amount. They said the measure will cause flight of money abroad. They proposed reduction of corporate tax rates to 25 per cent for listed companies, 27.5 per cent for manufacturing companies, 30 per cent for trading or non-manufacturing companies (excluding banks, insurances, mobile phone companies). Under the current tax structure, publicly traded companies are paying 27.5 per cent, non-publicly traded companies 37.5 per cent, banks, insurance and financial institutions 42.5 per cent and mobile phone operators 45 per cent tax. FBCCI leaders said the corporate tax rates are highest in the world which discourage the companies to show actual income. The chamber said there should be differences in corporate tax between manufacturing and trading companies. Other proposals on income tax include fixed tax at source at production stage of different products, special tax rebate for industiralisation in underdeveloped areas, tax exemption for CSR (corporate social responsibility) activities. It has proposed incorporation of capital of non-government organisations (NGO), invested in commercial business, into same tax rates as that of mainstream businesses. FBCCI proposed that the NBR bring all citizens of the country under tax net irrespective of government and private officials. The chamber has sought specific criteria for auditing of self-assessment income tax files to stop harassment of taxpayers. On fixation of gross profit (GP) for businesses, the apex body has sought implementation of recommendation of a committee that reached a consensus earlier to resolve the disputes between taxmen and taxpayers about GP. On VAT measures, the FBCCI has proposed continuation of the package VAT and tariff value, withdrawal of tax on rented space, and imposition of 15 per cent VAT on import of billet and ingot. The chamber proposed re-fixation of tariff values of items produced from imported or locally procured re-rollable scrap. FBCCI proposed reduction of VAT on construction of industries to 3.0 per cent from 5.5 per cent, withdrawal of VAT on locally produced machinery and spare parts, and waiver of supplementary duty (SD) from locally manufactured paints and varnishes.
The country's apex chamber Sunday urged the government to raise tax-free threshold for individual taxpayers to Tk 2,25,000 and reduce import duty on capital machinery, basic and intermediate raw materials in the upcoming budget for 2011-2012. The tax-free income slab is now Tk 165,000. The leaders of the leading chamber body the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), proposed reduction in duty for capital machinery and basic raw materials to 1.0 per cent from existing rates of 3.0 per cent and 5.0 per cent respectively. The FBCCI also proposed a cut in duty on intermediate raw materials (not produced locally) to 3.0 per cent from 12 per cent. It has proposed extension of the tax holiday facility until 2015. The facility is scheduled to expire on June 30 next. A 12-member delegation of the chamber body comprising its president AK Azad, first vice president Jashim Uddin, former president Salman F Rahman, electrical association president Abdur Razzak, FBCCI adviser Manjur Ahmed and director Abdul Huq placed a written proposal before the National Board of Revenue (NBR) in a pre-budget meeting. Mr AK Azad proposed that the NBR withdraw advance income tax (AIT) and advance trade VAT (ATV) on import of basic raw materials and capital machinery. He said the FDI (foreign direct investment) in flow has declined significantly. The trend could be reversed with the tax holiday facility. Mr. Azad requested the NBR chairman to repeal the existing law that empowered taxmen to send taxpayers to jail. "The 'black law' was abused by the caretaker government to harass businessmen. It should be repealed," he said. There are sufficient measures in the tax laws to punish tax evaders, including freezing of bank accounts, he said. "The criminal law should not be imposed on taxpayers. It is a tool for harassment," he said. Salman F Rahman said tax benefit should be provided to the companies on the basis of percentage of shares off-loaded in the stock market. "Grameenphone off-loading only 10 per cent shares is enjoying the tax benefit equivalent to that of Beximco which has off-loaded 60 per cent of its shares," he said. He made a plea to the NBR not to disclose information on taxpayers to any department, in violation of law. He also suggested full tax waiver for agriculture, textile, garments, electrical and electronics manufacturing industries on import of raw materials, ingredients and some components. The chamber leaders said the FBCCI suggestions, if implemented would help the country attract foreign direct investment and encourage joint venture investment with local companies. The chamber leaders criticised the newly proposed property tax describing it as double taxation on the tax-paid amount. They said the measure will cause flight of money abroad. They proposed reduction of corporate tax rates to 25 per cent for listed companies, 27.5 per cent for manufacturing companies, 30 per cent for trading or non-manufacturing companies (excluding banks, insurances, mobile phone companies). Under the current tax structure, publicly traded companies are paying 27.5 per cent, non-publicly traded companies 37.5 per cent, banks, insurance and financial institutions 42.5 per cent and mobile phone operators 45 per cent tax. FBCCI leaders said the corporate tax rates are highest in the world which discourage the companies to show actual income. The chamber said there should be differences in corporate tax between manufacturing and trading companies. Other proposals on income tax include fixed tax at source at production stage of different products, special tax rebate for industiralisation in underdeveloped areas, tax exemption for CSR (corporate social responsibility) activities. It has proposed incorporation of capital of non-government organisations (NGO), invested in commercial business, into same tax rates as that of mainstream businesses. FBCCI proposed that the NBR bring all citizens of the country under tax net irrespective of government and private officials. The chamber has sought specific criteria for auditing of self-assessment income tax files to stop harassment of taxpayers. On fixation of gross profit (GP) for businesses, the apex body has sought implementation of recommendation of a committee that reached a consensus earlier to resolve the disputes between taxmen and taxpayers about GP. On VAT measures, the FBCCI has proposed continuation of the package VAT and tariff value, withdrawal of tax on rented space, and imposition of 15 per cent VAT on import of billet and ingot. The chamber proposed re-fixation of tariff values of items produced from imported or locally procured re-rollable scrap. FBCCI proposed reduction of VAT on construction of industries to 3.0 per cent from 5.5 per cent, withdrawal of VAT on locally produced machinery and spare parts, and waiver of supplementary duty (SD) from locally manufactured paints and varnishes.