Expansion of tax net essential for increasing tax-GDP ratio

Experts tell ICAB webinar

FE Team | Published: June 16, 2022 23:40:33

Expansion of tax net is a sine qua non to improve the tax-GDP ratio. The government needs to take further steps to expand the tax net.
Experts made the opinion at a webinar 'Salient Features of Finance Bill 2022, organized by the Institute of Chartered Accountants of Bangladesh (ICAB) on Thursday, according to a statement.
"For certain types of companies, conditional reduction of tax rate, field of tax deducted at source and proposed rate change are good initiatives. The introduction of a 12 per cent tax rate for other general industries exporting goods and services and 10 per cent for the green industry will encourage diversification of exports of goods and services," the experts said.
Dr. Abdul Mannan Shikder, Member (Customs Audit, Modernization & International Trade) and Md. Mahmudur Rahman, Member (Taxes Legal & Enforcement), National Board of Revenue( NBR) were the panel speakers.
Md. Shahadat Hossain FCA, President of ICAB delivered the address of welcome while Md. Humayun Kabir FCA, Member Council and Past President of ICAB moderated the session.
MBM Lutful Hadee FCA, Council Member of ICAB, and Proprietor, Hadee Lutful & Co., Chartered Accountants and Snehasish Barua FCA, Partner, Snehasish Mahmud & Co., Chartered Accountants, jointly presented the keynote paper.
ICAB President Md. Shahadat Hossain FCA said, Bangladesh is targeting an average inflation rate of 5.6 per cent in the coming fiscal year; which is challenging but encouraging too as it is not only depending on the fiscal policy or monetary policy but also depending on few external elements and influences like rising oil prices, depreciation of the taka against the US dollar, the disruption of the global supply chain and the Russia-Ukraine crisis.
Keynote presenter Snehasish Barua FCA, said, 20 per cent tax has been proposed for listed entities with more than 10 per cent paid up capital through IPO, which is 22.5 per cent in current fiscal year. The companies can avail the rate upon condition that all investment and expenditure in excess of 12 lacs should be made through a banking channel. But the companies below 10 % paid up capital, the proposed rate is 22.5 % on condition that all receipts should be made through a banking channel.
On the same conditions for other than public companies tax rate is 27.5% reduced from 30 % and one person company tax rate 22.5% reduced from 25 % in the current fiscal year, have been proposed.
Snehasish Barua was presenting his keynote paper describing the various sections of proposed finance bill 2022. He said, 10 % uniform tax rate has been proposed for all export oriented companies; RMG and other than RGM upto 30 June 2028. At the same time to motivate backward industries of RMG sector, on a few conditions the tax rate on business income for textile industries has been reduced to 15 % for the period of 30 June 2025. Personal investment tax rebate is made 20 % of individual income fell under tax slab and that the middle income people will not get proper benefit from it, he opined.
For all types of exports, tax rate collection is increased by 1% which is unfavorable for exporters and will reduce export earnings, Mr. Snehasish Barua said adding, the TDS rates are raised in areas of minimum tax, hence the reduction in corporate tax rates will have less impact.
Another keynote presenter MBM Lutful Hadee FCA, Council Member of ICAB, and Proprietor, Hadee Lutful & Co., Chartered Accountants provided his insights regarding the amendments proposed by the Finance Bill, 2022, and changes brought in through SROs and orders include amendments in the VAT & SD Act, 2012 & VAT & SD Rules, 2016, general orders & special orders and the Customs Act, 1969.