Insurers urge govt to cut corporate tax
Tuesday, 29 March 2011
FE Report
The country's insurance sector Monday urged the government to reduce the existing high rate of corporate tax on the insurance companies, cut tax on their capital gain, and keep a tax exemption ceiling for the insurance agents. The leaders of Bangladesh Insurance Association (BIA) placed these proposals at a pre-budget meeting with the National Board of Revenue (NBR), with its chairman Dr Nasiruddin Ahmed in the chair. They said the insurance companies are paying corporate tax at the rate of 42.5 per cent, like the commercial banks, and the rate is too high for the sector. The government should impose tax on the insurance companies at a rate of 35 to 37 per cent, like the listed companies, and not at a high rate like banks, said BIA representative and Rupali Insurance managing director PK Roy. He also proposed the NBR to reduce the rate of income tax for the life insurance companies to 15 per cent. Mr Roy also sought fixation of tax on the insurers' capital gain at the rate of 5.0 per cent from the existing 10 per cent, and 3.0 per cent for the sponsor directors from 5.0 per cent. Insurance agents should enjoy the similar tax exemption ceiling benefit like the individual taxpayers on payment of income tax, the BIA representative added. "It is a discriminatory policy. All of the individual taxpayers enjoy a tax-exemption ceiling, while the insurance agents are not entitled to enjoy the same facility," Mr. Roy said. NBR first secretary (income tax policy) Apurba Kanti Das said the majority of the insurance agents are doing their job on a part-time basis along with other full-time jobs. On this ground, the revenue board has not kept the provision of any tax exemption ceiling on their earnings as insurance agents, he said. The BIA also proposed reduction of the licence renewal fees of the insurance companies, and allowing the banks and insurers to get tax refund on offering of dividends, like the publicly traded companies. In the fiscal 2002-03, the insurance companies were entitled to enjoy a 10 per cent tax rebate against the offering of minimum 25 per cent dividend. The BIA demanded reintroduction of the same in the upcoming budget. The revenue board chairman assured the BIA of providing all possible support after discussing their proposals with the NBR field-offices. Meanwhile, in another pre-budget meeting with the NBR, the representatives of light engineering, furniture and handicrafts sectors demanded the government to provide tax benefit facilities for flourishing their sectors and boosting export earning. The light engineering association president Abdur Razzak sought introduction of the truncated-base system of valued added tax (VAT) collection due to non-availability of necessary documents on purchase of their raw materials. "We cannot claim tax credit, as most of the raw materials of the industry are procured from roadside vendors," he said. He also demanded withdrawal of VAT on small-scale repairing industries. The light engineering association representative said the industry owners have to face various roadblocks to be enlisted as cottage industry for enjoying tax benefit. The NBR can recognise an industry as cottage industry at division-level to avoid the complexities, he said. On customs duty, Razzak sought withdrawal of duty on base-metal, which is not manufactured locally. Furnishers' association president and managing director of Akhtar Furnishers K M Akhtaruzzaman said the furniture industry could export products worth US$ 70 million this year, from $35.4 million last year. He said the furniture factories have to import colour, wood etc by paying higher taxes, and the taxes should be reduced in the next budget. "The Export Promotion Bureau (EPB), exporters and importers are preparing a comprehensive proposal, identifying the roadblocks of the sector. The proposal will be submitted to the NBR within few days," he said. The representative of handicraft association demanded continuation of the existing tax benefit for the sector to compete with the foreign producers. He also sought withdrawal of VAT on rented space to minimise the cost of production of the local handicrafts companies. NBR chairman Dr Nasiruddin Ahmed requested the businesses to duly pay taxes on their earnings to strengthen revenue base.
The country's insurance sector Monday urged the government to reduce the existing high rate of corporate tax on the insurance companies, cut tax on their capital gain, and keep a tax exemption ceiling for the insurance agents. The leaders of Bangladesh Insurance Association (BIA) placed these proposals at a pre-budget meeting with the National Board of Revenue (NBR), with its chairman Dr Nasiruddin Ahmed in the chair. They said the insurance companies are paying corporate tax at the rate of 42.5 per cent, like the commercial banks, and the rate is too high for the sector. The government should impose tax on the insurance companies at a rate of 35 to 37 per cent, like the listed companies, and not at a high rate like banks, said BIA representative and Rupali Insurance managing director PK Roy. He also proposed the NBR to reduce the rate of income tax for the life insurance companies to 15 per cent. Mr Roy also sought fixation of tax on the insurers' capital gain at the rate of 5.0 per cent from the existing 10 per cent, and 3.0 per cent for the sponsor directors from 5.0 per cent. Insurance agents should enjoy the similar tax exemption ceiling benefit like the individual taxpayers on payment of income tax, the BIA representative added. "It is a discriminatory policy. All of the individual taxpayers enjoy a tax-exemption ceiling, while the insurance agents are not entitled to enjoy the same facility," Mr. Roy said. NBR first secretary (income tax policy) Apurba Kanti Das said the majority of the insurance agents are doing their job on a part-time basis along with other full-time jobs. On this ground, the revenue board has not kept the provision of any tax exemption ceiling on their earnings as insurance agents, he said. The BIA also proposed reduction of the licence renewal fees of the insurance companies, and allowing the banks and insurers to get tax refund on offering of dividends, like the publicly traded companies. In the fiscal 2002-03, the insurance companies were entitled to enjoy a 10 per cent tax rebate against the offering of minimum 25 per cent dividend. The BIA demanded reintroduction of the same in the upcoming budget. The revenue board chairman assured the BIA of providing all possible support after discussing their proposals with the NBR field-offices. Meanwhile, in another pre-budget meeting with the NBR, the representatives of light engineering, furniture and handicrafts sectors demanded the government to provide tax benefit facilities for flourishing their sectors and boosting export earning. The light engineering association president Abdur Razzak sought introduction of the truncated-base system of valued added tax (VAT) collection due to non-availability of necessary documents on purchase of their raw materials. "We cannot claim tax credit, as most of the raw materials of the industry are procured from roadside vendors," he said. He also demanded withdrawal of VAT on small-scale repairing industries. The light engineering association representative said the industry owners have to face various roadblocks to be enlisted as cottage industry for enjoying tax benefit. The NBR can recognise an industry as cottage industry at division-level to avoid the complexities, he said. On customs duty, Razzak sought withdrawal of duty on base-metal, which is not manufactured locally. Furnishers' association president and managing director of Akhtar Furnishers K M Akhtaruzzaman said the furniture industry could export products worth US$ 70 million this year, from $35.4 million last year. He said the furniture factories have to import colour, wood etc by paying higher taxes, and the taxes should be reduced in the next budget. "The Export Promotion Bureau (EPB), exporters and importers are preparing a comprehensive proposal, identifying the roadblocks of the sector. The proposal will be submitted to the NBR within few days," he said. The representative of handicraft association demanded continuation of the existing tax benefit for the sector to compete with the foreign producers. He also sought withdrawal of VAT on rented space to minimise the cost of production of the local handicrafts companies. NBR chairman Dr Nasiruddin Ahmed requested the businesses to duly pay taxes on their earnings to strengthen revenue base.