Also urges for official recognition for good borrowers
Bangladesh's business community expects further corporate tax cuts in the upcoming budget for the next fiscal year 2021-22.
The government had reduced corporate tax for non-listed firms from 35% to 32.5% in last year's budget, using scientific methodology, to buffer the loss from 7-9%, from International Support Measures (ISM) in export earnings, following the LDC graduation.
However, the tax rate for publicly traded companies remained unchanged at 25% during the last fiscal budget.
But with the ongoing surge in Covid-19 pandemic and the disruptions brought by the multiple waves, the business community expects a further tax cut as the cost of business has increased, while consumption decreased.
Former president of Dhaka Chamber of Commerce and Industry (DCCI) Shams Mahmud told Dhaka Tribune that businesses need to sustain working capital. “Sales and consumption have decreased across numerous sectors, and the cost of businesses has increased with the current tax structure,” he also said.
FBCCI, the apex trade organization of the country, also echoed the sentiment for a corporate tax cut during the 41st meeting of the budget consultative committee with the National Board of Revenue (NBR) last month.
Its president Sheikh Fazle Fahim suggested abolishing the advanced income tax (AIT) gradually in the next two years and reducing the corporate tax by 2.5%.
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) president Faruque Hassan had also demanded an exemption on all local products and services for the readymade garments industry from VAT and return submission.
He also demanded halving the tax at source on export from 0.50% to 0.25% and the continuation of the facilities for the next five years in the upcoming budget.
The business community has also expressed solidarity against the current provision of whitening black money.
In the last budget, the government had allowed the whitening of black money through investments in the stock market and the real estate industry against a certain percentage of tax for one year.
"We are supportive of fiscal measures to legalize undisclosed and untaxed money in the upcoming budget, but the government needs to clearly distinguish between undisclosed, untaxed money and illegal money that comes from crimes such as human trafficking, drug smuggling, etc," said Shams Mahmud.
The government needs to incentivize good borrowers instead. Good borrowers should be recognized in the upcoming budget, he added.
The business community has also expressed widening the tax base to encourage businesses and individuals to pay taxes and formulate policies that establish a linkage with small and medium enterprises (SMEs) and the government-initiated Economic Zones (EZ).