Tax holiday, special fund sought in next budget for new, small entrepreneurs

Business leaders have proposed incorporating a provision of tax holiday for small, cottage and medium enterprises in the next budget to offset the loss caused by the pandemic.

The Dhaka Chamber of Commerce and Industry and the Bangladesh Chamber of Industries have also demanded that the corporate tax rate for companies be gradually reduced and creation of special funds for new entrepreneurs.

Making at least 5% of the company's research and development spending tax-free, reduction in dividend tax by 10%, extension of refund by 1 month, 1% tax on capital machinery import and tax holiday benefits for the investment in greenfield infrastructure for five years include their demands.

Rizwan Rahman, president of Dhaka Chamber, and Anwarul-ul-Alam Chowdhury, president of Bangladesh Chamber, presented their proposals at the pre-budget discussion organised by the National Board of Revenue (NBR) on Wednesday.

NBR Chairman Abu Hena Md Rahmatul Muneem presided over two separate budget discussions with the business organisations.

Taking part in the first discussion, BCI president Anwar-Ul-Alam Chowdhury Parvez said small and medium entrepreneurs have suffered the most during corona and almost all new entrepreneurs have lost their capital. In this situation, if tax is imposed on them, they will not be able to turn around.

"These institutions will be able to pay all taxes and Vat when they grow. So, there should be a provision in the budget for special assistance to them," he made the demand.

Speaking on the occasion, BCI Director Engineer Mohabbat Ullah said, "After five years and eight months, business is being stopped through the issuance of a demand letter, but once NBR officials themselves issued a directive for the release of goods."

"We are forced to pay for running business. Billions have been spent on the online system, but who uses it?" he posed a question.

In another budget discussion, DCCI president Rizwan Rahman put forward 37 proposals including amending Income Tax, Vat and Customs Act.

He proposed to reduce the company's tax rate by 7.5% per annum at the rate of 2.5% over the next three years. 

The corporate tax rate in other neighbouring countries is also much lower than that in Bangladesh, said the business leader.

Rizwan proposed to halve the existing 20% tax on corporate dividend income, provide tax benefits if invested in research and development, reduce the mandatory 0.5% tax on total income above Tk3 crore and bring the entire income tax system online.

VAT refund time frame should be one month instead of three, the business leader said, adding, if the authority of charging a fine goes to lower level officials, the power will be misused.

Besides, it was also proposed to reduce the penalty for forgetting the HS Code (product identification number), increase the turnover tax to Tk3 crore and fix the rate at 4% and reduce the advance tax on the imports of industrial raw materials to 4%. 

Taking part in the discussion, Narsingdi Chamber of Commerce and Industries president Mohammad Ali Hossain demanded a change in the Vat system when it comes to selling clothes.

He said if a retailer sells clothes worth Tk5 crore a year, he makes a profit around Tk8-Tk10 lakh, but NBR officials are demanding Vat of Tk25 lakh at 5% on the turnover. 

In response to the discussion with the chamber leaders, NBR Chairman Abu Hena Md Rahmatul Muneem said the budget would be prepared with an aim to provide benefits to local industries. 

He added that in the next budget, special facilities will be provided for the production of home appliance products also.

Earlier, MA Mubin Khan, president of Bangladesh Private Medical Colleges Association, demanded withdrawal of the existing 15% income tax on the income of the sector as a non-profit organisation.

In response, the NBR chairman said: "If there is an income, why not pay tax?" 

"However, we are thinking whether tax holiday can be offered in connection with the medical services provided to common people in remote areas."

He added that many benefits do not reach those whom NBR aims at, rather, such benefits go to unscrupulous traders or a certain group.