FICCI for reducing corporate tax to avoid adverse effect

The Foreign Investor's Chamber of Commerce and Industry (FICCI) in Bangladesh at a press conference on Wednesday has expressed reservation over the proposed for fiscal 2023-2024and particularly on draft Income Tax Act (ITA), 2023.

Its leaders fear the draft Income Tax Act, unless reviewed will have adversely impact business and employees income.

FICCI has appreciated the increased allocation to power and energy sector, but  expressed concerns over perceived inadequacy of allocations for health, agriculture and education sectors.
Moreover the draft Income Tax Act (ITA), 2023requires extensive reviews as some of the provisions seems unreasonable compared to Income Tax Ordinance, 1984, FICCI said.

It was expected gradual withdrawal of minimum tax provisions in the new law but instead it has been increased significantly, particularly on Carbonated Beverage Industry from 0.6pc to 5pc of Gross Receipts.

This will result a price hike of 30pc or more. The industry already faces customs duty in the range of 5-10pc and Indirect Tax (SD + VAT) of 43.75pc which is the highest across South Asian countries.

This will result in a fall in consumption and reduction in government tax collection to eventually impact FDI plans and industry employment. FICCI has therefore urged the government to rationalize the minimum tax to 1 pc to allow the industry to grow.

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's earning.

Limiting cash transaction for corporates business 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 100pc 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.

So property tax should be brought down substantially and mouza value must be periodically updated to reflect the market price. FICCI proposes digitalization of the three wings of NBR and externally connected systems for seamless transaction.

For 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.

FICCI has also urged 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 become effective from 1st July 2023 instead of "with immediate effect."

Naser Ezaz Bijoy, President of FICCI, said, "The progressive changes proposed by the government is praise worthy, however, business growth and individuals may slow down with the disclosure of some of the provisions.

Deepal Abeywickrema, Sr. Vice President, Engr. Abdur Rashid, Member of Board of Directors, Sazzad Rahim Chowdhury, coordinator ofTarrif-Taxation and Regulatory Affairs Committee, Debabrata Roy Chowdhury among others were present.