Tax hikes don't always fill coffers

Higher effective tax rate and minimum tax hikes for beverage companies have raised concerns about hurting foreign investment in Bangladesh.
Zaved Akhter, president of the Foreign Investors' Chamber of Commerce and Industry (FICCI), said tax collection on carbonated beverages has already declined, proving that tax hikes do not necessarily contribute to higher domestic revenue mobilisation.
Speaking at a seminar on 'Decoding the Finance Bill 2024' at a city hotel on Sunday, he emphasised tax system reforms that focus on internal improvements rather than imposing a greater tax burden on existing taxpayers.
The seminar was organised by Snehasish Mahmud & Co, Chartered Accountants.
Snehasish Barua, a partner at Snehasish Mahmud and Company and a member of the Institute of Chartered Accountants Bangladesh (ICAB), gave a comprehensive technical presentation on the proposed changes in the Finance Bill, placed in Parliament last Thursday and their impact.
Zaved Akhter, also the managing director of Unilever Bangladesh Limited, said the reduction in the corporate tax rate has not been an effective incentive due to higher expense disallowances, eventually resulting in a hike in the effective tax rate to up to 40 per cent.
He also found the tax hike on mobile phones and internet to be contradictory to the government's "Smart Bangladesh" vision.
In his presentation, Mr Barua discussed the challenges of achieving the revenue target and analysed effective tax rates across different industries.
Ikhtiar Uddin Mohammad Mamun, director general of the BCS Tax Academy and Dr Abdur Rouf, director general of VAT Audit, Intelligence and Investigation Wing, attended the programme as special guests.

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