Top business leaders have been demanding the government to take steps to put an end to the harassment businesses face at the hands of VAT and tax officials and extend the loan moratorium period to help recover the affected firms from the Covid-19 pandemic. Some 40 to 50 per cent of businesses, they fear, will turn defaulters if the loan repayment period is not extended up to at least June 2024 as most of them are either running operations at losses or in the stage of recovery. In this perspective, the Dhaka Chamber of Commerce and Industry (DCCI) at a press briefing on Sunday urged formation of an Accountability Commission (AC) under the Public Private Partnership (PPP) model to end harassment by tax officials.
A news report published in The New Nation on Monday said that the chamber also emphasized the importance of fully automating overall taxation, VAT, audit, arrears management, investigation and inquiry, appeal, revenue account management, taxpayer account management, and revenue information management. It proposed that the government slash corporate tax to 27.5 per cent from the current 30 per cent in the 2022-2023 fiscal year. This, the chamber mentioned, is to meet the challenges of LDC graduation. After graduation, the corporate tax rates must be at or near the regional average. Referring to an estimated $2.5 billion export loss after graduation, the cost of doing business would go up substantially with the 6-7 per cent newly imposed tariff.
Indeed, the corporate taxpayers find annual budgetary cuts in corporate taxes apparently juggling the figures. Thus, the cut in corporate-tax rate is eyewash as the effective tax rate is increasing, says an ex-tax official. Experts opined that corporate tax should be collected on profit, not on revenue. To them, Bangladesh’s two major export destinations are Europe and the US. The two markets account for about 67 per cent of its exports, whereas Africa and Middle East markets remain untapped. After the LDC graduation, our exports without duty free market access will face numerous challenges. Therefore, businesses should focus product diversification as well as exploration of new markets. We also have to develop negotiation skills on international trade.
To cope up with the growing demand of a skilled workforce in the future, the government has to invest more in research and development. We expect that transparency and equity in the ‘Income Tax Act 2022’ must be ensured to make it business-friendly.
