The government has again been urged to consider an emergency tax reduction for companies as tax payment appears burdensome for them amid economic fallout caused by the ongoing Covid-19 pandemic.
Bangladesh is now facing a second wave of the pandemic. The pandemic containment measures taken by the government have had an adverse impact on earnings of the companies. Even many firms continue to struggle and face risk of insolvency due to disruption in production cycle and poor sales turnover, with falling consumer spending over uncertainty about the development of the pandemic and mitigate the novel coronavirus.
Considering the fact, economists and business leaders suggested the government to adopt a friendly tax policy in the upcoming budget to help companies weather the Covid-19 crisis.
They also urged the taxmen to refrain from doing ‘excesses’ in realizing tax revenue while using their discretionary power.
“The coronavirus containment and mitigation measures have had sudden and profound impact on companies by reducing their earnings in a big margin. In this situation, tax payment becomes a big burden for them,” Dr Ahsan H Mansur, Executive Director at the Policy Research Institute (PRI), Bangladesh, told The New Nation yesterday.
He said the authorities can take various measures to alleviate tax burden of businesses created by the pandemic. These have included deferral of tax payments, extension of filing deadlines, rate reductions and exemption of minimum tax.
“The authority should allow businesses for the exemption of all mandatory tax reporting deadlines until economic recovery and show flexibility to companies suffering sales losses,” he added.
Referring to allegation of businessmen, Dr Mansur, a former senior Executive of International Monetary Fund (IMF), said: “Tax officials doggedly pursue audit trails to realize taxes from business firms for their personal gain. Businessmen and company officials are frequently being harassed in this process.”
He suggested the government to bring down the rates of corporate tax in the upcoming budget considering the Covid-induced economic slowdown.
When asked, Dr Mansur said, “Company tax can be lowered by bringing efficiency in the collection system. Besides, reform measures are necessary to make tax system more efficient and equitable.”
“Businessmen are struggling to survive due to the pandemic fallout. In this situation, we want relief from tax burden. We expect the new budget to set out measures to protect businesses,” said Dhaka Chamber of Commerce and Industry (DCCI) president Rizwan Rahman.
He said the DCCI has proposed to reduce the corporate tax and withdraw the minimum tax. Besides, it also proposed to raise the turnover tax-free ceiling to provide the small traders with a brief relief.
“We have already placed our budget wish list before the National Board of Revenue (NBR), seeking mainly to ease tax burden on companies,” Rahman added.
Adeeb Hossain Khan, member of the Budget Committee of MCCI, said, ” To reduce the tax burden on companies, the law of the minimum tax payment should be scrapped. Under the law, a company has to pay a 2 per cent minimum tax on turnover even if it incurs a loss. The law makes it difficult for loss-making small and new companies to survive.”
Tax regime should be reformed
Dr Ahsan Mansur cited that only a tax relief is not enough, there is also a need for reforms in the tax structure and reducing tax evasion. NBR should make tax payment system simple, plug existing loopholes, and reduce discretionary power of the tax collectors and introduce automation to ensure transparency of the tax system.
