Staff Reporter :
Foreign investors are refraining from investing in Bangladesh due to the high corporate tax rates, Bangladesh Investment Development Authority (BIDA) claimed.
The government agency came up with the remarks while speaking at a pre-budget discussion with the National Board of Revenue (NBR) in the conference room of the revenue board in the city on Thursday.
NBR Chairman Abu Hena Md Rahmatul Muneem presided over the discussion, while its Member (Customs Policy) Masud Sadik, Member (VAT Policy) Zakia Sultana and Member (Tax Policy) Shams Uddin Ahmed, among others, were present.
Speaking at the discussion, Shah Mohammad Mahboob, Director General (DG) of International Investment Promotion wing of the BIDA, said, “Corporate tax is a big issue in implementing new investment proposals. The foreign investors always take into consideration the corporate tax rates of neighboring and competing countries before investment.”
“Many interested investors also refrain from making investment decisions due to the higher tax rates in Bangladesh. So, the tax rate needs to be reduced in order to encourage the new foreign investment,” he said.
He further said, “The corporate tax rate is between 21 and 24 per cent globally. But, in our country, the rate is 32 per cent for non-listed companies. So, it will help make the country’s business environment to the foreign investors positive, if the rate is rationalized.”
Demanding abolition of Tax Identification Number (TIN) compulsory provision for foreign directors, the BIDA’s DG said, “According to the Finance Act, TIN is mandatory for the directors to form companies. But the big foreign investors usually don’t come to Bangladesh or don’t stay here without business trip. So, they need to get rid of the obligation to take TIN.”
Mahboob also said, “Various international online media or social media like Amazon, Facebook and Google pay VAT in Bangladesh but they don’t pay corporate tax. So, their legal representatives should be brought under the corporate tax net.”
NBR Chairman said corporate tax is relaxed to a great extent in the country.
He further said, “You are all proposing to reduce corporate taxes. I did not expect this from you.”
“Sometimes, tax exemptions are given for such a long time, those investors’ activities often end within that period,” he added.
Apart from BIDA, Bangladesh Economic Zones Authority (BEZA), Bangladesh Export Processing Zones Authority (BEPZA), and Business Initiative Leading Development (BUILD) made various proposals at the meeting.
Despite steady economic growth in the country over the past decade, the FDI has been comparatively low in Bangladesh compared to regional peers. As compared with $2.9 billion FDI inflow in Bangladesh in 2019, FDI inflows amounted to $141.2 billion in China, $50.6 billion in India, $23.9 billion in Indonesia and $16.1 billion in Vietnam.
In Bangladesh, the rate of FDI inflow is only around 1 percent of GDP, one of the lowest in Asia. While even during the pandemic (2020), FDI flows to developing countries in Asia increased by 4 percent to $535 billion, Bangladesh could not achieve the expected FDI, according to figures from the UN Conference on Trade and Development (UNCTAD).
In 2020, foreign investors invested around $17 billion in Vietnam, $64 billion in India, approximately $18.58 billion in Indonesia, whereas Bangladesh received $ 2.56 billion.
The foreign investors invested $2.51 billion in Bangladesh in 2021, while it was $3.61 billion in 2018 the highest amount of inflow in a single year.
