15 Mar Avantisteam Reports ICAB proposes corporate tax rationalisation
The Institute of Chartered Accountants of Bangladesh on Sunday recommended a number of amendments to the Income Tax Ordinance 1984, including rationalisation corporate tax and tax at source, for getting new investment in the country.
ICAB officials said that the archaic ordinance should be amended for higher revenue generation and tax-GDP ratio, increase in the private sector investment, employment generation, export diversification and attract more foreign direct investment.
The institution came up with the suggestions at a members’ conference on Sunday.
National Board of Revenue chairman Abu Hena Md Rahmatul Muneem was present at the conference as the chief guest.
ICAB president Muhammad Farooq said that there was a need for the rationalisation of the tax rate both at the higher end and lower ends of the scale.
As an apex professional institute of the country, the ICAB feels that it is necessary to reform the country’s tax system to meet the demand of the changing world, he said.
He said that automation of the tax administration and integrated automation with other statutory organisations were required to make the tax system in Bangladesh more growth-friendly, simple, transparent and fairer.
To make the income tax law more user-friendly, synchronisation or alignment of sections and chapters of the ordinance and the rules are very important, ICAB said in its proposal.
To create further investment and employment, the NBR may reduce the corporate tax rate subject to a certain portion of the tax savings which is required to be re-invested and rationalise the TDS rate for the industries, it said.
The NBR may consult with Bangladesh Bureau of Statistics and gather the Standard Industrial Classification (SIC) codes to classify each sector and their related industries. This will then be embedded in the ETIN database to identify the sectors.
‘We recommend inclusion of a concrete guideline in the ITO, 1984 for collection of TDS from the value of the goods and services supplied & consumed in Bangladesh,’ he said.
‘Huge amount of money is remitted outside by foreign personnel without paying any tax to the NBR. Our proposal will be to impose more penalties on employers of these organisations who employ such unauthorised employees and cancel all benefits (like, reduced rate/ bond facilities) they receive from the NBR,’ he added.
Sale of shares by foreign owners of a Bangladeshi company to another nonresident person is subject to tax in Bangladesh if there is transfer of any assets situated in Bangladesh.
Due to lack of proper reporting liability, such companies are not liable to disclose the gains.
There should be no provision for minimum tax on new investments and the burden of the final tax for tax deduction at source should be waived for them.
The NBR should carry conduct research and take a strategic decision about offering exemptions to increase the government’s revenue from the private sector.
The NBR should reduce the TDS as per global practice.
A guideline should be included in the ordinance regarding amalgamation, merger and de-merger.
To ensure better scores in the Doing Business 2020 index, the NBR needed to introduce online tax payment system, online submission of appeal, effective tax refund system and reduction of the frequency of tax payment.
NBR members Nahar Ferdousi Begum, Ranjan Kumar Bhowmik and Masud Sadiq were also present at the conference.