ICAB leaders urge taxation system reforms, automation

Leaders of the Institute of Chartered Accountants of Bangladesh (ICAB) on Wednesday called for taxation system reforms and automation to reduce business costs and enhance revenue collection.

At a press conference on the upcoming national budget at the institute, they also requested that the authorities ensure a level playing field for domestic and foreign investors to encourage more investment in the backward linkage industry to overcome post-LDC challenges.

The digitalisation of the tax system and integration of various relevant departments will revolutionise the tax department, ICAB Member Snehasish Barua, FCA, said in a detailed presentation of the institute's proposals for the budget. 

He requested the authorities introduce a provision to realise income tax from multinational companies' liaison offices on their income from Bangladesh.

At the same time, the government should make the submission of every project's Proof of Submission of Return (PSR) to the Central Procurement Technical Unit at the planning ministry mandatory, he added.

Snehasish Barua said the National Board of Revenue (NBR) has reduced the corporate tax rate to 27.5% but businesses are not getting its benefits due to high Digital Services Tax (DST) rates, which are defined as minimum tax in some cases.

The ICAB also proposed to increase the number of LTUs-based growth centres to boost revenue realisation and at the same time, enterprises should go automatically into LTUs after exceeding their turnover limit.

The government of every country adopts a policy called "Principle of Economy", which means avoidance of high expenditures incurred for the collection of taxes. "So in our country, we also have to increase the tax revenue by avoiding such unnecessary expenditures," ICAB observed.

Adopting a holistic digital approach rather than partial digitalisation will increase the collection of value-added tax. At present, only registration and tax return submission are possible online. Efforts should be made to digitise other stages of this process.

In order to reduce the cost of production and harassment of tax payers, the ICAB feels that advance tax should be waived on raw materials and equipment used by companies registered for VAT as manufacturers or service providers.

ICAB's salient recommendations regarding the Customs Act are a special bond facility to facilitate export diversification and the introduction of a central bond facility for exporters located outside the bond facility provided to disguise exporters.

"We can determine the duty correctly by following the correct procedures of the Tariff Act and following the currency exchange rate," ICAB President Md Moniruzzaman FCA said at the press conference.

He said the global market provides all the information on various commodities, which can be collected to create a database of imported goods and exported goods in the NBR system.

From those databases, it is possible to make an estimate about the respective duty rates and prices of the commodities.

Tariff policy and tariff rates should not be changed frequently. If long-term policies are introduced, importers will get an advantage in terms of forecasting, and the image of the country will be better, he added.

In view of the introduction of this DVS system, a framework has been established for the preparation of financial statements. In this case, the NBR should monitor whether the officials of the Tax Department, Value Added Tax Department, and Customs Department are following this procedure effectively and efficiently. As a result, ICAB believes that the ratio of tax to GDP will increase many times.