• Monday, Jan 30, 2023
  • Last Update : 09:54 am

Businesses demand more than just 'business-friendly' budget

  • Published at 02:09 pm June 14th, 2021
Budget 2021
Mehedi Hasan/Dhaka Tribune

Various commodity-based business organizations said through press conferences or press releases that most of their proposed demands were not properly reflected in the budget

The business community remains unconvinced about how "business-friendly" the national budget for fiscal year 2021-22 is, which is why they are demanding more concessions for sustaining their businesses.

Most of the business associations voiced their demands or deprivations, despite Finance Minister AHM Mustafa Kamal labelling the budget as "pro-business."

Various commodity-based business organizations said through press conferences or press releases that most of their proposed demands were not properly reflected in the budget.

The proposed budget brought a cluster of benefits for businesses, including the reduction of corporate taxes, tax exemptions in various fields, initiatives for the development of domestic industries, export incentives and so on.

But they demanded more, most of them related to value added tax (VAT) and other taxes. 

Also Read - Kamal presents Tk603,681 crore Bangladesh budget for 2021-22 fiscal year

The Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) expressed dissatisfaction over the increase in advance income tax (AIT) from 5% to 20% in the proposed budget, fearing disruption in the ease of doing business. 

Additionally, advance tax (AT) on imports has been reduced from 4% to 3% only, although FBCCI had urged to withdraw tax entirely.

They urged the revocation of tax waiver privilege on software and IT facility sales, to keep all e-commerce services out of the source tax net, apart from other demands.

The major three organizations of the apparel sector, BGMEA, BTMA and BGAPMEA applauded the budget for continuing 1% export incentives, continuation of the existing 0.5% source tax, the reduction of corporate tax, and continuation of all conventional cash assistance.

But BGMEA President Faruque Hassan said that the national budget excluded some proposals proposed by the BGMEA aimed to support the apparel industry.

“Now we demand continuation of the existing rate of 0.5% for long-term business planning though we proposed to reduce it to 0.25%. The frequent changes of source tax would hamper business plans,” he also said. 

Also Read - Budget FY22: A budget of tax cuts and exemptions

Bangladesh Textile Mills Association (BTMA) expressed their dissatisfaction with the proposed budget as the budget didn’t mention any proposals like duty-free and tax-free import of all types of fibre.

Mohammad Ali Khokon, president of BTMA, said that without a fixed policy for setting VAT at Tk3 on yarn and the absence of a proposal to abolish VAT on fabric made of synthetic fibre may hamper the “Made in Bangladesh” initiative.

However, they welcomed decisions like a discount on the import duty on photosensitive rotary screens and temperature probes.

The expectations of small and medium-sized export-oriented garment accessories and packaging industries have not been fulfilled as well, said the Bangladesh Garment Accessories and Packaging Manufacturer and Exporters Association (BGAPMEA). 

Md Abdul Kader Khan, president of BGAPMEA, said that the accessories and packaging sector never got equal opportunities like other apparel sectors.

“We proposed to fix the corporate tax at 10-15% but it has been reduced from 32.5% to 30%,” said Abdul Kader Khan. 

Bangladesh Ceramic Manufacturers and Exporters Association (BCMEA) said that their interests are unprotected in the proposed budget. 

Shirajul Islam Mollah, president of BCMEA said that domestic companies provide about 64% of the national demands but theproposed budget did not repeal or reduce the 15% supplementary duty and 15% VAT. 

Also Read - CPD: Budget lacks mid-, long-term recovery plans from Covid-19

Moreover, the tariff on imported tiles has been reduced which will increase imports and the suffering of local entrepreneurs. They demand it be reformed in the proposed budget, he added.

The Bangladesh Reconditioned Vehicles Importers and Dealers Association (Barvida) urged the government to reconsider supplementary duty on import of 10–15-seater microbuses.

Restaurant owners demanded reducing value added tax (VAT) for all types of restaurants and wanted a three slabs VAT system in the proposed national budget.

SME entrepreneurs welcomed the proposal of tax exemption of women entrepreneurs with an annual turnover up to Tk70 lakh and the proposal to protect domestic industries. 

But they are also disappointed over the proposal of imposing taxes on mobile financial services (MFS) which will hamper the journey towards full-fledged e-commerce.

Talking to Dhaka Tribune, Prof Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue (CPD), said that the proposed budget is completely business-friendly. 

The businesses should have no more demands as all the benefits related to VAT and tax are given, he also said.

“Business associations are informed about their demands and most of the demands are related to VAT or Tax.Besides these financial factors, there are other factors to improve the business and increase investment,” said the CPD Distinguished Fellow. 

Now businesses can look to ease of doing business, infrastructural supports, implementation of One Stop Service Act, he added.

“Businesses are given enough discounts in fiscal measures. They can now think beyond it like why the stagnation in investment and why the private investment is stuck in 23-24%. They can also look at the IT and digital sectors to increase investment,” he also said.

Talking to Dhaka Tribune, Abul Kashem Khan, chairperson of Business Initiative Leading Development (BUILD), said that there is no doubt that it is a very positive and business-friendly budget for businesses as most of the demands of them have been met.

“But if AIT and AT are not abolished, it cannot be called a fully business-friendly budget and it should be abolished in the proposed budget. If businesses have to pay taxes before profits, they will be discouraged from expanding their businesses. Moreover, If AT and AIT are abolished, they will no longer need to get incentives,” he also said. 

Finance Minister AHM Mustafa Kamal presented the proposed national budget of Tk603,681 crore for the 2021-22 fiscal year in the parliament on June 3.

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