Foreign Investors' Chamber of Commerce and Industry's (FICCI) on Friday said that the GDP growth target of 8.2 percent is achievable provided that GDP-investment ratio increase to the expected level of 32 percent. In a post-budget reaction, it said well-structured and transparent companies will require sufficient time to accommodate the provision of new VAT and SD Act, 2012 and Rules, 2016 in their business process.
Therefore, the Chamber said, it strongly recommends allowing at least six months for implementation of the same which has not been considered in the proposed Finance Bill, 2019, reports UNB.The Chamber proposed reducing corporate tax rate to increase investment in the economy but this has not been considered in the proposed budget. It recommends that the corporate tax rate should be reduced gradually taking into consideration the corporate tax rates prevailing in other countries.
The Chamber appreciated that the proposed budget retains the feature of continuity. It also expects that the proposed changes should be implemented in a manner which will bring positive results and benefits to the people. The Chamber feels that the proposed budget with the Chamber's suggested amendments will accelerate investment, improve the business environment and socio-economic condition of the country.
The Chamber reviewed the 2019-20 National Budget, as proposed by the Finance Minister on Thursday and assessed its implications on the country's business in general, and foreign investment in particular.
It said the proposed budget of Tk 5,23,190 crore, which is 18.22 percent higher than that of revised budget of last fiscal year, is challenging in comparison to 12.60 percent growth in the immediate preceding year.The Chamber appreciated notable allocation for human resource development. It also expressed concern for bridging the deficit from banking sources which may tighten the liquidity situation.
The Chamber particularly appreciated the following proposals, made in the proposed budget - fixation of a time-limit for the issuance of certificates by NBR under double taxation treaty, withdrawal of tax on the dividend received from non-resident Bangladeshi Company, increase in the threshold of wealth surcharge, increase of dividend income exemption threshold, withdrawal of the restriction in taking input VAT rebate from certain services.
It said the Finance Act, 2017 had a bold provision of withdrawing withholding tax on the supply of direct materials. Unfortunately, tax has been proposed on direct materials which will be detrimental to industrial growth, said the Chamber. The Chamber supported the vision of digitalisation of Bangladesh.However, the proposed increase of SD (Supplementary Duty) minimum income tax and SIM tax on telecom services will contradict the said vision.
The inclusion of leave fare assistance under the purview of perquisites will increase tax on tax as opposed to Chamber's proposal for withdrawal of the limit on the perquisites. Historically, it said, the title of the schedule of SD on locally manufactured items was "SD at manufacturing stage" which has been changed to "SD at supply stage". Consequently, the Chamber added, the cost of locally-manufactured products will go up significantly and make them uncompetitive to imported ones and this will discourage local production.
The Chamber's proposal for withdrawal of the existing ceiling on head office expense, royalty and technical assistance fees has not been considered. "This will adversely impact on the inflow of FDI in Bangladesh." The Account Current balance under VAT Act, 1991 will be adjustable under the new VAT law only to the extent of 10% per month, it said.This provision should be withdrawn and the balance be adjustable immediately, said the Chamber.
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