At pre-budget dialogues leading economists and business leaders have demanded corporate tax and duty cuts along with reduction of the value added tax (VAT) to ensure business-friendly taxation in the country. Our businesses are already facing losses due to the pandemic. Despite the losses, they still have to pay at least minimum taxes. So, businesses of various sectors expect tax and duty cuts as well as VAT waiver in the upcoming budget.
Finance Minister AHM Mustafa Kamal will place the proposed national budget for the fiscal year 2021-22 of around Tk 6 trillion with a revenue collection target of Tk 3.3 trillion in Parliament on June 3. The overall budget deficit will be set at Tk 214,681 crore which is 6.2 per cent of the Gross Domestic Product (GDP). An official document shows that the budget deficit in fiscal 2020-21 was Tk 190,000 crore. Domestic borrowing from banks and non-banking sources will fill the budget deficit.
The business leaders and economists said the next budget must have clear and proper indications for economic recovery amidst the ongoing pandemic. To them, corporate tax is higher in Bangladesh than in neighbouring India and even South East Asian countries including Vietnam, Thailand and Malaysia. The rate of corporate tax is 15-30 per cent in India whereas most of the companies in Bangladesh pay this tax at rates more than 30 per cent.
In fact, one major demand placed by businesses is withdrawal of minimum tax on turnover irrespective of profit or loss. Currently, a company with an annual turnover of over 30 million must pay a five per cent tax on its transactions. There is nothing called minimum tax in India whereas taxpayers in Bangladesh must pay a minimum tax of Tk 3000-4000. If advance tax and advance VAT are reduced then cash flow will increase in businesses. And if corporate tax is reduced it will regenerate investment and employment opportunities.
Sources at the National Board of Revenue (NBR) said, the new business enterprises in the information technology sector might come under tax holiday. Agriculture, fruit and dairy processing industries, electronic products may also be added to the tax holiday list. Tax rationalisation is a must to keep the economy dynamic and vibrant. We hope the administration would not lose sight of this for being under pressure to increase revenue earnings. If a large number of businesses pay tax the total amount becomes large even if the rate is low and conversely.
