Tax net expansion to get priority in next fiscal
Tuesday, 25 March 2008
FE Report
The National Board of Revenue (NBR) Chairman Muhammad Abdul Mazid said Monday the government is exploring ways to expand tax-net in the next fiscal rather than increasing tax-rate.
"We have been conducting a series of meetings with the associations and trade bodies to find some effective measure in this connection to include in the next fiscal budget," Mazid said in a pre-budget discussion meeting with the financial institutions and small and medium enterprises.
The NBR is willing to reduce taxes if it helped beef up revenue collection, he said.
Moazzem Hossain, editor of The Financial Express (FE) who also attended the meeting said: "The government in the next budget should emphasise on making fiscal policy more effective and credible."
Transparency and compliance are two most vital factors for expanding tax-base, he said, adding that reduction of taxes is not the only solution.
The FE editor appreciated the role of the non-banking financial institutions (NBFIs) in national economy and also in capital market development.
The Bangladesh Leasing and Finance Companies Association (BLCFA) representative sought difference in tax rates for listed and non-listed companies, tax waiver for Vat and tax as the same extended to Banks. It also suggested reduction of Advance Income Tax (AIT) to 10 per cent from 15 per cent.
Insurance association has demanded reduction of income tax on insurance to 40 per from 45 per cent, amendment to existing rules on deduction of tax at source and reduction of agent fees in insurance to Tk 50 from Tk 500.
Bangladesh shop owners association representatives suggested increase in individual tax exemption ceiling to 0.2 million and withdrawal of provision of charging Tk 1000 AIT on issuance of fresh trade licence and use the same as renewal fee. It also wanted the government to give investment facility to legalise un-taxed income and impose specific duty on import of essential commodity.
It assured the NBR of providing all possible help to collect Vat from its members.
Bangladesh Bank representative, Khalidur Rahman said: "Being a regulator, the central bank has complied recommendations from different banks and NBFIs and forwarded the same to the board on the basis of its importance."
It has placed suggestions including continuation of tax exemption facility on the amount provisioned by individual commercial banks for the next three assessment years starting from 2008-09.
Under the finance act 2005, the actual amount provisioned or 1.0 per cent of outstanding loans, whichever is lower, used to be considered as business expenditure. The facility was in vogue until assessment year 2006-07.
Different opinions came in the meeting on obtaining mandatory Taxpayers Identification Number (TIN) for credit cards holders, irrespective of the loan limit.
Any one taking bank loan amounting less than Tk 0.5 million (Tk 5.0 lakh) is not required to have TIN under the income tax ordinance. Foreign Investors Chamber of Commerce and Industry (FICCI) representative said the sale of credit card decreased over the last two years due to the imposition of this rule.
The NBFIs also urged the NBR to reintroduce depreciation allowance benefit for the leasing companies in the budget for fiscal 2008-09.
In the current fiscal budget, the government withdrew the provision of depreciation benefit for the leasing industry and financial institutions by amending income tax ordinance 1984.
Anis A Khan, who attended the meeting on behalf of Metropolitan Chamber of Commerce and Industry (MCCI), said: "The financing and leasing institution has been suffering a setback as the authority has withdrawn the facility."
To encourage the bond market, earning from different types of bonds should be allowed to get tax exemption in line with the earning from zero-coupon bond.
Different opinions were also expressed whether lease seeker or providers are entitled to enjoy the depreciation benefit.
The NBFIs also demanded for framing specific regulations for co-operative credit society to monitor their transactions.
The Bangladesh dressmakers association suggested reduction of VAT to 1.5 per cent from 4.5 per cent.
Watch importers association demanded imposition of specific tariff value in inland container depot (ICD) and airport, withdrawal of Pre-shipment inspection (PSI) and check import of low quality watch.
Spectacles association requested removal of discriminatory tax system on imported and local spectacles. He also requested to withdraw Vat at local stage.
The National Board of Revenue (NBR) Chairman Muhammad Abdul Mazid said Monday the government is exploring ways to expand tax-net in the next fiscal rather than increasing tax-rate.
"We have been conducting a series of meetings with the associations and trade bodies to find some effective measure in this connection to include in the next fiscal budget," Mazid said in a pre-budget discussion meeting with the financial institutions and small and medium enterprises.
The NBR is willing to reduce taxes if it helped beef up revenue collection, he said.
Moazzem Hossain, editor of The Financial Express (FE) who also attended the meeting said: "The government in the next budget should emphasise on making fiscal policy more effective and credible."
Transparency and compliance are two most vital factors for expanding tax-base, he said, adding that reduction of taxes is not the only solution.
The FE editor appreciated the role of the non-banking financial institutions (NBFIs) in national economy and also in capital market development.
The Bangladesh Leasing and Finance Companies Association (BLCFA) representative sought difference in tax rates for listed and non-listed companies, tax waiver for Vat and tax as the same extended to Banks. It also suggested reduction of Advance Income Tax (AIT) to 10 per cent from 15 per cent.
Insurance association has demanded reduction of income tax on insurance to 40 per from 45 per cent, amendment to existing rules on deduction of tax at source and reduction of agent fees in insurance to Tk 50 from Tk 500.
Bangladesh shop owners association representatives suggested increase in individual tax exemption ceiling to 0.2 million and withdrawal of provision of charging Tk 1000 AIT on issuance of fresh trade licence and use the same as renewal fee. It also wanted the government to give investment facility to legalise un-taxed income and impose specific duty on import of essential commodity.
It assured the NBR of providing all possible help to collect Vat from its members.
Bangladesh Bank representative, Khalidur Rahman said: "Being a regulator, the central bank has complied recommendations from different banks and NBFIs and forwarded the same to the board on the basis of its importance."
It has placed suggestions including continuation of tax exemption facility on the amount provisioned by individual commercial banks for the next three assessment years starting from 2008-09.
Under the finance act 2005, the actual amount provisioned or 1.0 per cent of outstanding loans, whichever is lower, used to be considered as business expenditure. The facility was in vogue until assessment year 2006-07.
Different opinions came in the meeting on obtaining mandatory Taxpayers Identification Number (TIN) for credit cards holders, irrespective of the loan limit.
Any one taking bank loan amounting less than Tk 0.5 million (Tk 5.0 lakh) is not required to have TIN under the income tax ordinance. Foreign Investors Chamber of Commerce and Industry (FICCI) representative said the sale of credit card decreased over the last two years due to the imposition of this rule.
The NBFIs also urged the NBR to reintroduce depreciation allowance benefit for the leasing companies in the budget for fiscal 2008-09.
In the current fiscal budget, the government withdrew the provision of depreciation benefit for the leasing industry and financial institutions by amending income tax ordinance 1984.
Anis A Khan, who attended the meeting on behalf of Metropolitan Chamber of Commerce and Industry (MCCI), said: "The financing and leasing institution has been suffering a setback as the authority has withdrawn the facility."
To encourage the bond market, earning from different types of bonds should be allowed to get tax exemption in line with the earning from zero-coupon bond.
Different opinions were also expressed whether lease seeker or providers are entitled to enjoy the depreciation benefit.
The NBFIs also demanded for framing specific regulations for co-operative credit society to monitor their transactions.
The Bangladesh dressmakers association suggested reduction of VAT to 1.5 per cent from 4.5 per cent.
Watch importers association demanded imposition of specific tariff value in inland container depot (ICD) and airport, withdrawal of Pre-shipment inspection (PSI) and check import of low quality watch.
Spectacles association requested removal of discriminatory tax system on imported and local spectacles. He also requested to withdraw Vat at local stage.