Name: FICCI
Address: House # 59 (Level-04), Road # 1 Block # I, Banani Dhaka-1213, Dhaka, Bangladesh, BD, 1213
Telephone: +8802222271611

Dhaka, Monday, 10 June 2024: Foreign Investors' Chamber of Commerce and Industry (FICCI) appreciated the proposed national budget 2024-25, aimed at supporting the economy amidst challenges. With a budget size of Tk. 7,97,000 crore, constituting 14.2% of GDP, the government targets 6.75% GDP growth and 6.5% inflation for 2024-2025. FICCI sees these targets as ambitious but achievable with an effective execution plan. The proposed reforms, especially in Income Tax and Customs aim to enhance revenue, reduce deficits, and enhance investor confidence. These observations were made by Zaved Akhtar, President of the FICCI at a post-budget press meet held today, at Pan Pacific Sonargaon Dhaka.

The chamber welcomed few proposals as presented in the Finance Bill but expressed concern over the extra duty and tax imposed on telecom, carbonated beverages water purifiers as the increased tax for manufacturers poses a crucial challenge to the profitability and viability of these businesses and will hamper attracting potential FDI.

FICCI also expected focus on financial sector reform, critical for a strong and resilient financial system.

Stakeholders, including FICCI, highlight Bangladesh's low revenue-to-GDP ratio, urging the need for improvement. According to Household Income Survey, 10% of the population contributes to ~40% of national income but according to NBR we only have 10mln registered taxpayers, still a far cry from brining people within the tax net. While the government works towards this, results are awaited. FICCI suggested innovative approaches, such as sector-wise revenue analysis and increasing the taxpayer base.

FICCI welcomed the acceptance of their proposed amendments in the Finance Bill 2024, particularly the prospective tax rate, fulfilling a long-standing demand from the business community. Maintaining these rates will enable businesses to plan and invest effectively. Additionally, FICCI expressed gratitude for the acceptance of their proposed amendment simplifying Tax Deduction at Source for industrial raw materials. The extension of time for Monthly Withholding Tax Return submission is also crucial, accepted through the Finance Bill 2024.

FICCI appreciated tax reforms in the proposed 2024-2025 budget to simplify the tax system. But high Effective Tax Rates (ETR) remain a key concern for the industry. While they appreciated the 15% income tax rate for private funds, they note concerns about exempting public funds from taxation, creating disparities between government and private sector employees.

Projections indicate an expected GDP growth rise by +93 basis points and a decrease in inflation by +150 basis points. Detailed implications of deficit financing, such as potential higher interest rates and the need for a balanced approach to ensure fiscal stability, are crucial. The removal of incentives from private EZs and High-tech Park while keeping incentives for government EZs may erode investor confidence.

NBR has proposed an increase in personal income tax rate. This measure may be seen as unfair by regular taxpayers and could inadvertently encourage tax evasion. Such changes in tax slab will discourage compliant taxpayers as they are being penalized for their hard earned, also making this retrospective is against NBR’s current policy of predictive tax culture hence recommended to restate last year rate to be applicable for AY 2024-25.The principle of reducing tax rates while widening the tax net aims to create a fairer and more efficient tax system. This encourages compliance, increases taxpayers, boosts economic growth, ensures fairer tax distribution, and simplifies tax administration, leading to more stable and predictable tax revenue.

The NBR aims to achieve Tk. 4,80,000 crore revenue, 60% of the proposed budget. FICCI raised concerns about the achievability of this target. The proposed budget lacks allocation or guidance for automating Tax, VAT, and customs administration, which would simplify tax collection and enhance efficiency. Without these reforms, VAT credit complexities and financial strain on businesses may persist. Changes in TDS compliance, like including entities above TK 10 crore under withholding authority, are crucial.

Initiatives for digital tax integration aim to simplify and increase transparency in the tax process. These reforms, such as merging the three wings of NBR (Income Tax, VAT & Customs), separating the Collection Department from the Policy Department, and implementing the National Single Window (NSW) project, will help enforce the law properly. These reforms are necessary to streamline Tax & VAT processes, reduce administrative burdens, improve productivity, and encourage compliance to support economic growth.

About FICCI

Foreign Investors’ Chamber of Commerce & Industry (FICCI) the apex chamber of multinational companies has been working as the development frontier of Bangladesh by creating significant footprints in economic growth since its journey started in 1963. As a leading chamber, FICCI represents Foreign Investors from Thirty-five (35) countries across the globe in Twenty-one (21) sectors in Bangladesh. In its six decades of excellent journey, around 210 member companies of this chamber are contributing around 30% internal revenue of the government and representing more than 90% inward FDI in Bangladesh. FICCI’s member companies are aligned with the government’s goal and contributing more for the community and society which eventually support the country to attain the status of “Smart Bangladesh.”

For any clarifications regarding the above, kindly contact:

T.I.M Nurul Kabir

Executive Director

Foreign Investors’ Chamber of Commerce and Industry (FICCI)

Mobile No: +880 1711-563977, TnT No: +8802222271610, +8802222271611

Fax: +8802222271609

Email: info@ficci.org.bd, Website: www.ficci.org.bd

Subarna Mostafa

Specialist, Communication, PR & Stakeholder Management | FICCI

Mobile +880 1728 045819

Email: subarna.mostafa@ficci.org.bd

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