Key chambers seek fiscal benefits as baits for investors

Electric vehicles come among newer sectors as key chambers seek fiscal benefits like cut-down taxes in the upcoming budget and automated taxing system to encourage local and foreign investors.
Leaders of two of the chambers placed Wednesday their proposals calling for the government to consider those in order to sustain and attract more investors to potential fields in Bangladesh.
They suggest a cut in effective tax rates for corporate taxpayers, reducing taxes on beverage items, waiver of supplementary duty on water and considering a revision of minimum taxes provisions on industries in the budget for the fiscal year 2024-25.
Such tax burden is triggering escalation of cost of operation of investors and discouraging them from expanding their businesses here, they noted.
Metropolitan Chamber of Commerce and Industry (MCCI) and Foreign Investors Chamber of Commerce and Industry (FICCI) formally placed the proposals in a pre-budget meeting at the National Board of Revenue (NBR), with NBR chairman Abu Hena Md Rahmatul Muneem in the chair.
The MCCI delegation was led by its president Kamran T Rahman and FICCI team by its president Zaved Akhtar. FICCI Tax Consultant Snehasish Barua made a presentation on the chambers' budget proposals for FY 2024-25.
Leaders of the trade chambers said the businesses were not being able to avail the pared-down corporate taxes due to imposition of some conditions on cash transaction as around 80 per cent of the country's economy is in informal sector.
They said effective tax rates for corporate taxpayers surged exorbitantly, even up to 50 per cent for public limited companies, although the actual rate is 20 per cent, due to higher disallowance of expenses and deduction of source taxes.
"It is discriminatory and not fair to impose taxes on different funds, including provident fund, managed by private sectors, while it is exempted for government employees," says one of the proposals submitted by the MCCI.
The FICCI proposed immediate integration with all government agencies, including City Corporation and Land Registration, through which the country can bring more taxpayers into tax bracket.
The chamber has proposed rationalization of duty-taxes and framing a guideline to get prepared for Bangladesh's graduation from the least-developed country (LDC) status.
And the MCCI has proposed that the NBR subscribe to international database to get the customs- assessment value.
"Currently, customs consider database or record value, in most cases, by ignoring the transaction value of goods," the MCCI proposal points out.
It has proposed automation of the VAT system through e-invoicing and digitizing the VAT-refund system.
"FICCI, being the representative of around 210 foreign companies operating in Bangladesh, has been contributing more than 30 percent of total government revenue. To achieve Vision 2041, Bangladesh needs to improve its Tax-GDP Ratio from current 8.74 percent to 22 percent which is a big milestone," FICCI President Zaved Akhtar said.
The FICCI identified the need for a comprehensive and Integrated Digital Architecture for the country to track the economic transaction and attract due taxes from the taxpayers.
It also highlights immediate action to integrate already-available systems such as E-TDS, Online Return, E-TIN etc.
He stressed simplification of Taxation Systems and elimination of manual process to ease the compliance and reporting.
The foreign chamber shares its recent research report on "Catalyzing Greater FDI for Vision 2041: Priorities for building a conducive Tax System in Bangladesh" with the NBR to facilitate the ongoing transformation in the taxation system.
Meanwhile, in a written proposal, Bangladesh-China Chamber of Commerce and Industry (BCCCI) has proposed that the government consider tax benefits to encourage use of electric vehicles, manufacturing motorized vehicles, yarns produced by local spinning mills and reducing source tax on raw materials.
The chamber placed the proposals Wednesday with the NBR.
The chamber leaders proposed allowing two-and three-wheelers with EV aligned with international trend by cutting duty-taxes for EV to 12 per cent and 5.0 per cent from the existing 58.60 per cent and 37 per cent respectively.
They also suggest widening the gap of duty taxes to 25 per cent from existing 12 per cent between CKD and CBU to facilitate local manufacturing industry of motor parts.
To check import of high-value motor cars, the chamber has proposed encouraging the manufacturing of CKD vehicles.
It has proposed cut in source tax on yarn produced by local spinning mills to 0.25 per cent from 2.0 per cent and supply of raw materials by local manufacturing industries to 0.50 per cent from 4.0 per cent.

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