The Foreign Investors’ Chamber of Commerce and Industry (FICCI) has raised concerns about the reduced allocation for some key mega projects in the proposed national budget for the fiscal year 2022-23.
The move will result in slowing the implementation of the projects as well as raise the total cost of the projects, according to FICCI.
“We feel instead of reducing the allocation in mega projects, the government could concentrate on enhancing the quality of spending, which could bring further efficiency as well as generate employment,” the apex chamber of multinational companies doing business in Bangladesh said.
It also expressed concern about financing the deficit from banking sources, as that may tighten the liquidity situation.
Also, FICCI has said an entity is required to pay the Workers Profit Participation Fund (WPPF) as per the provision of labour law.
“It is not a dividend but rather an expense, a portion of which is also payable to the government. It is an expense not at the discretion of the company but a compulsion. Moreover, an individual is required to pay tax on it for an amount exceeding Tk50,000. Disallowing such a legitimate business expense will increase the tax burden of the compliant businesses,” FICCI said.
“No significant changes have been made in section 56 of the ITO, 1984 except for bandwidth and other payments. The current TDS rate in section 56 is extremely high which should have been rationalised.”
“Considering the overall existing macroeconomic scenario and increasing inflation rate, we feel the tax ceiling for individuals should have been increased, which has not been changed for the last two fiscal periods,” FICCI said.
The budget proposed amnesty on the declaration of foreign assets in tax return by paying tax at different rates.
“We do not encourage this kind of amnesty, but as the foreign minister mentioned to bring the undisclosed monies from abroad back to the country to shore up reserves as a reason we appreciate. However, out of the three options, the one where cash and equivalents are brought back to Bangladesh seems to be the only one that supports the intention.”
“The other two options where moveable and Immoveable properties are kept outside of Bangladesh may well go against the stated objective, in fact, these two may result in more money going out of the country,” the chamber said.
The corporate tax rate for certain listed and non-listed companies will be cut by 2.5 percent subject to certain conditions.
“Corporate tax reduction has become a consistent change in tax policy which is welcoming. But considering the current economic condition and infrastructure, the proposed cash transaction limit must be increased,” FICCI said.
“Tax deduction at source from payment to raw material suppliers will be reduced to 4 percent from 7 percent which will minimize the gap between statutory tax and an effective tax rate of those suppliers. We still believe TDS should not be made applicable for the supply of raw materials.”
“Reduced tax rates at 10/12 percent have been introduced for all general industries exporting goods and services. Insertion of the definition of export will reduce the complexities of the export of goods and services. We also believe that this sort of export-friendly initiative will bring export diversification and bring down the trade deficit with other countries.”
