Dhaka: The Metropolitan Chamber of Commerce and Industry (MCCI) today stressed the need to abolish conditions on cash transactions within the corporate tax framework.
According to Bangladesh Sangbad Sangstha, the trade body pointed out that despite the continuous reduction of the corporate tax rate and effective tax rate in recent fiscal years, the benefits remain inaccessible due to the cash transaction stipulations outlined in the Finance Act, 2024. This issue was raised during a pre-budget meeting with the National Board of Revenue (NBR) held at the NBR office in the city.
NBR Chairman Abdur Rahman Khan and MCCI President Kamran Tanvirur Rahman were in attendance at the meeting. Kamran Tanvirur Rahman highlighted that Bangladesh's economy is predominantly informal, with limited reliance on banking systems, making compliance with these conditions challenging for large and medium enterprises.
He added that the effective tax rate sometimes reaches 40-50 percent due to tax deductions at source and unauthorized expenses. Rahman advocated for reforms in advance income tax and turnover tax policies, suggesting a shift towards income-based taxation rather than turnover-based.
The MCCI also underscored the importance of developing tax administration and introducing digitalization to curb tax evasion and boost revenue.
The Foreign Investors' Chamber of Commerce and Industry (FICCI) also presented their budget proposals at the meeting. Chartered accountant Snehasish Barua delivered the proposals on behalf of FICCI, emphasizing collaboration with the NBR to create a more integrated tax system that streamlines revenue collection and enhances internal revenue mobilization.
FICCI recommended distinguishing policy formulation from revenue collection to improve efficiency, transparency, and fairness within the tax system. They advocated for a shift towards a robust direct taxation system, suggesting the establishment of a Data and Analytics Team within the NBR to enhance tax collection and compliance.
To attract more foreign investments, FICCI proposed optimizing the effective tax rate by withdrawing thresholds for inadmissibility, rationalizing Tax Deducted at Source (TDS), and gradually eliminating the minimum tax. These measures aim to create a competitive tax environment to boost foreign direct investment (FDI).
In alignment with global sustainability trends, FICCI suggested introducing preferential tax rates and excise benefits to foster the development of green supply chains in Bangladesh. They also recommended implementing a unified VAT rate to simplify the VAT structure and reduce complexities for businesses.
FICCI called for the expedited resolution of import and export issues to streamline trade and enhance business operations in Bangladesh. They urged the NBR to ensure proper classification of raw materials and intermediate goods to prevent higher tariffs, thus reducing cost burdens and increasing global competitiveness for manufacturers.