MCCI pleads for cut in corporate tax

The Metropolitan Chamber of Commerce and Industry (MCCI) has proposed a cut in corporate tax rates in the next budget to attract investment in the country.
The chamber leaders said corporate tax rates in Bangladesh are one of the highest among the neighbouring countries. The rates should be rationalised, they said.
The chamber made the proposal at a pre-budget meeting Sunday with the National Board of Revenue (NBR) at its premises.
"The present flat rate of corporate tax for banks, insurance companies and non-banking financial institutes at 42.5 per cent of total income has been extremely high. It is also very high compared to that of neighbouring and other Asian countries," said Adib H Khan FCA, taxation sub-committee chairman of the MCCI.
The rate of corporate tax is 33.99 per cent in India for banks and non-banking financial institutions. It is 35 per cent in Pakistan and 28 per cent in Sri Lanka.
High corporate tax hinders accumulation of fund for re-investment prescribed by the Bangladesh Bank. So the chamber strongly suggested that the corporate tax rates of banks, insurance companies and non-banking financial institutions should be reduced to 35 per cent of their total income.
MCCI president Rokia A Rahman said the businesses need tax incentives and attractive packages in the budget for fiscal year 2014-15 to coup with huge losses due to political turmoil and energy shortages.
NBR chairman Ghulam Hussain, however, urged the chamber leaders to suggest revenue-generating sources as the revenue board will have to collect Tk 1.49 trillion taxes in the next FY.
On behalf of the MCCI, Mr Adib proposed reduction of Advance Income Tax (AIT) to 3.0 per cent from existing 5.0 per cent on import of products.
"Taxmen disallow expenses of companies to adjust the paid AIT at import stages," he said.
He also proposed to waive the 5.0 per cent tax on making appeal to courts by a taxpayer.
Responding to the proposal, the NBR chairman said the government is being deprived of its due revenue for years as businesses lodge cases keeping taxmen's demands pending.
"Around Tk 260 billion taxes are now stuck up in  court cases, filed by the businesses. With this, the businesses are enjoying bank interests of the payable taxes to the government," he added.
The MCCI also proposed to incorporate a provision under which taxpayers can invest their provident fund in fixed deposit receipt (FDR), curtail discretionary power of Deputy Commissioners of Taxes (DCTs) and withdraw the provision of minimum payment of 0.5 per cent tax irrespective of profit or loss of companies.
The chamber has proposed to the government to allow imported software to enjoy depreciation facility as some high-end software is not yet available in the country.
MCCI member Saiful Islam, also chairman of Western Marine Shipyard, proposed to withdraw 5.0 per cent AIT on local letter of credit (L/C) and exempt VAT on import of services by exporters.
Hassan Mahmud, another MCCI member, urged the NBR to net people who are not under tax net despite having considerable amount of assets.
"As per the existing provisions, one having taxable income is required to pay both income tax and surcharge but one having no taxable Income but having huge amount of exempted income is not required to pay either income tax or surcharge. This is unjust, and therefore, the provisions should be rearranged," the MCCI proposal said.
Former president of the Bangladesh Association of Software and Information Services (BASIS) Habibullah N Karim sought tax exemption for a specific period of time to help investors plan their investment on long term.
"The ICT sector has been enjoying tax exemption since 1999 but it is being extended every year. We propose tax exemption facility for a five-year term to attract both local and foreign investors," he said.
Mamun Rashid, a former banker, proposed to review the impact of tax benefit given to the listed companies in capital market and rationalise the rates of non-listed companies according to the findings.
He also referred to cell phone companies' claim on excessive fiscal intervention of the government as a hindrance to their business growth.
On value added tax (VAT) and customs duty related proposals, the MCCI leaders demanded extension of submission of documents to the VAT authority, waiving of VAT on import of technical know-how for exporters and resolution of anomalies in VAT demands by field offices.
Akhter M Chaudhury, Managing Director of Nuvista Pharma LImited, alleged wrong demand for payment of VAT by a field office.
Mr Habibullah urged the NBR to re-launch its move to automate the VAT collection system with prescribed software.
Responding to the proposal, the NBR chairman said the move has been suspended after the board found non-transparency on appointment of software companies.
NBR member Feroz Shah Alam said the NBR is yet to be ready to handle the updated software of the companies with this process.
The NBR chairman said the problems will be resolved soon as the board is going to be fully automated by next year.    
In the written proposal, the MCCI proposed to set tax-free ceiling at Tk 2,75,000 for individual taxpayers, Tk 3,25,000 for females and Tk 3,50,000 for senior citizens.