AdminDhaka, Wednesday, 14 June
2023: The Foreign Investor’s Chamber of
Commerce and Industry (FICCI) at a press meeting today has expressed some
concerns about the proposed national budget for the fiscal year 2023-2024 and draft
Income Tax Act (ITA), 2023 which will have implications for the businesses and
employees in Bangladesh.
While FICCI
appreciated the increased allocation for the power and energy sector, they
expressed concern over perceived inadequacy of allocations for the health,
agriculture and education sectors in the budget. On the other hand, draft Income
Tax Act (ITA), 2023 requires extensive reviews as some of the provisions in the
law seems unreasonable as compared to the Income Tax Ordinance, 1984.
FICCI expected gradual withdrawal of minimum tax provisions
in the new law instead it has been increased significantly, particularly on
Carbonated Beverage Industry from 0.6% to 5% of Gross Receipts (8X increase).
This will result a price hike of 30% or more. The industry already faces a
customs duty in the range of 5-10% and Indirect Tax (SD + VAT) of 43.75%, which
is the highest across South Asian countries. This will result in a fall in
consumption and reduction in government tax collection subsequently and
eventually impact FDI plans and industry employment. Therefore, the government
is requested to rationalize the minimum tax to 1% to allow the industry to
grow.
The other
key concern is the deletion of provisos from WHT provisions and in the absence
of Rules yet, uncertainties around effective WHT are high. For example, unless
the same provision like ITO 1984 continues in the proposed Act or in the Rules
tax burden on supply by distributors to modern trade, supply of imported goods,
etc. will be significantly increased.
As per the
proposed Act, incentive bonus will be regarded as perquisite. FICCI assesses
that this will increase effective tax on companies and possibly have
implications on employee earning. Not allowing other income to set off against
business loss goes against the spirit of taxation. Alongside, the provision of tax on interest on
foreign loan and disallowance of entire expense for failure to provide Proof of
Submission of Tax return by third party vendor should be omitted.
Limiting cash transaction for corporates &
organizations will put a cap on development as the country is yet to achieve
total cashless transaction. Government should allow companies to spend a
minimum percentage of its expenses rather than setting a definite number and set
a target to achieve the 100% cashless goal in next 5 years.
The increased tax on property will instigate people not to
disclose the real property price in the formal document, instead they will use
Mouza rate. This can deprive government of a huge source of tax. Which is why property
tax instead of increasing the transaction cost it should be brought down substantially
and mouza value must be periodically updated to reflect the market price.
FICCI proposes
reduction of arbitrary power of officers in tax procedure and suggested implementation
of comprehensive digitalization of the three wings of NBR and externally
connected systems for seamless transaction.
According to the draft Income Tax Act (ITA),
2023, individuals could no longer enjoy exemptions on income from WPPF, Mutual
Funds, and Dividends to certain limits. Leave fare assistance (LFA) will now be
considered as taxable income. Also, for the purpose of tax rebate on
investment, there is lack of clarity whether shanchay Patra will be considered
as eligible investment. Investment limit on mutual fund/unit fund and Govt.
securities have been capped to BDT 5 lac. Taxing Private recognized provident
fund will reduce earnings of the beneficiary while keeping Government Provident
fund as tax exempt is discriminatory. FICCI requests the government to revisit
the provision as this will badly affect the individual’s net take home.
FICCI
requested the government to publish an authentic English version of ITA 2023,
mapping, and indexing. The apex body of
foreign investors also says that clear provision should be included in the
proposed act so that the proposed ITA 2023 is effective prospectively from 1st
July 2023 instead of “with immediate effect.”
Commenting on the proposed National Budget 2023-24 and draft ITA 2023 Mr. Naser Ezaz Bijoy, President of FICCI, said, “The progressive changes proposed
by our government is applaudable, however, the growth of the businesses and individuals
may slow down with the disclosure of some of the provisions which will raise
more tax burden. The imposed vat on locally
manufactured mobile phones and increasing tax burden on loss making companies
may aggravate the situation. We have some recommendations regarding solutions
that may prevent the probable adverse situation. We hope that the
recommendations are taken into consideration and allow the chamber to extend
its continued support to the Government of Bangladesh and work together toward
the development of the country by developing a tax-friendly environment.”
The press conference was graced
by FICCI officials including Deepal Abeywickrema, Sr. Vice President, Engr.
Abdur Rashid, Member of Board of Directors, Sazzad Rahim Chowdhury, coordinator
of Tarrif-Taxation and Regulatory Affairs Committee, Debabrata Roy Chowdhury,
Member of Tarrif-Taxation and Regulatory Affairs Committee, T.I.M Nurul Kabir,
Executive Director, and Snehasish Barua, Consultant.
About FICCI
The Foreign Investors’ Chamber of Commerce & Industry
(FICCI) is the apex chamber of more than 200 multinational companies and
foreign investors from thirty-five (35) nations across the globe in more than
Twenty-one (21) sectors in Bangladesh. As a key economic partner of Bangladesh,
FICCI has been working closely with the Government, through streamlining and
enabling cross-border trade and investment, disseminating useful
research-driven market intelligence and through supporting regulation that
benefits its membership.
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
For any clarifications regarding the above, kindly get in
touch with:
Subarna Mostafa
Specialist, Communication, PR &
Stakeholder Management | FICCI
Mobile +880 1728 045819
Email: subarna.mostafa@ficci.org.bd
