Businesses called for a long-term policy and tax reform on Monday, saying these measures would help attract both local and foreign investment and increase revenue collection.
They also requested that the government review some of the proposed budget measures, including a reduction in source tax for export-oriented sectors, the proposed import duty on capital machinery for factories in economic zones and ensuring an uninterrupted gas supply.
These observations were made at a post-budget discussion organised by the American Chamber of Commerce in Bangladesh (AmCham) at a city hotel. Dr M Masrur Reaz, chairman of Policy Exchange of Bangladesh, moderated the discussion.
Mahbubul Alam, president of the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI), said a long-term policy for at least five years is essential to attract both local and foreign investment. This, he said, would allow investors to plan and run their businesses more effectively.
"We want to pay tax and VAT, but it must be hassle-free," he said, calling for measures to widen the tax net instead of putting pressure on existing taxpayers.
In this regard, Mr Alam recommended formalising the country's large informal sector, which would help increase the revenue.
The FBCCI president also suggested that the National Board of Revenue (NBR) introduce separate units for revenue collection and policy implementation.
Criticising the government's proposed measure to increase penalties for mistakes in HS goods codes from 200 per cent to 400 per cent, he said customs officials receive a 20 per cent dividend and this policy should be reviewed.
Seeking an uninterrupted gas supply, Mr Alam also called for the immediate implementation of the logistics policy, arguing that it would help reduce business costs once in place.
Nihad Kabir, former president of the Metropolitan Chamber of Commerce and Industry (MCCI), said the discussion topics, including inflation, GDP growth, macroeconomic policies, tariff policy and corporate tax rate, have remained the same as those discussed a decade ago.
"The NBR is still trying to collect revenue in the same way it has been done for the last fifty years," she said. "We need a structural change in how revenue is determined, collected and how tax policy is made in this country."
Speaking over more than 300 development projects that stand to be cancelled, she said challenges create opportunities and added this is the opportunity to continue with regulatory reform efforts.
"This is the time to scrutinise where the leakages and inefficiencies lie and to prioritise addressing our performance shortfalls," she suggested.
Masrur Reaz, presenting a brief overview of the proposed budget for the 2024-25 financial year, highlighted its focus on predictability.
The income tax rate is projected to remain stable at 28 per cent for five years, and a 30 per cent tax rate applies to high earners. However, a policy allowing undisclosed money to be formalised at a lower rate undermines regular taxpayers, he said.
Mr Reaz said the budget's tax revenue targets seem unrealistic given the current economic climate and expected shortfalls. It could have done more to directly address the impact of inflation.
Reaz also noted a decrease in budgetary allocations for two key sectors. "Transport and connectivity, crucial for businesses -- encompassing trade infrastructure, logistics, and connectivity -- has seen a drop," he said. "There is also a reduction in energy and power allocations, especially in energy, by about 13 per cent."
Former NBR chairman Muhammad Abdul Mazid pointed to the inefficiency of the NBR as a reason for persistently low revenue collection despite the country's potential.
He said the proposed budget increases the burden of indirect tax, which would not help curb inflation. He emphasised separate tax policy formulation and implementation, arguing it is contradictory for the NBR to do both.
Ashraf Ahmed, president of the Dhaka Chamber of Commerce and Industry, said tax rates for economic zones would not generate revenue.
Moinul Huq, Citi country officer, Bangladesh, Citibank, stressed on foreign currency inflows and improving the implementation rate of annual development projects.
He also suggested being mindful of export growth, noting a possible mismatch between shipment value and realised value.
"So that also needs to be cleared out, actually what sort of gap we are actually having, which is a real gap or actually there is some mismatch, but that is I think another point is also coming under the discussion," he noted.
Mr Huq expressed hope for a better situation by the end of the year.
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