The Foreign Investors’ Chamber of Commerce and Industry (FICCI) has termed the proposed national budget ‘challenging.’
In a post-budget reaction on Friday, the FICCI said the size of Tk 523,190 crore budget is 18.22per cent larger than that of the revised budget of the last fiscal.“It is challenging in comparison to 12.60 percent growth of preceding year” The Chamber expressed its concern over bridging the deficit from banking sources which may tighten liquidity situation.
The FICCI opined that the gross domestic product (GDP) growth target of 8.2 per cent is achievable if the GDP-investment ratio could be increased up to the expected level of 32 per cent.
It appreciated notable allocation for human resource development.
While appreciating, the FICCI in a press statement said the government proposed that fixation of a time limit for issuance of certificates by the NBR under double taxation treaty. Withdrawal of tax on the dividend received from non-resident Bangladeshi company. Increase in threshold of wealth surcharge. Increase of dividend income exemption threshold.
“Withdrawal of the restriction in taking input VAT rebate from certain services”.
The FICCI also expressed its concern over the issues—-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. The Chamber strongly recommended for allowing at least six months for their implementation which has not been considered in proposed Finance Bill, 2019.Finance Act, 2017 had a bold provision of withdrawing withholding tax on supply of direct materials. Unfortunately, tax has been proposed on direct materials which will be detrimental to industrial growth.
The Chamber supported the vision of digitalisation of Bangladesh. However, the proposed increase of SD, minimum income tax and SIM tax on telecom services will contradict the aforesaid vision.
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, 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 cost of locally manufactured products will go up significantly and make them incompetitive to imported ones and this will discourage local production.
The Chamber’s proposal for withdrawal of 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 new VAT law only to the extent of 10 per cent per month. This provision should be withdrawn and the balance should be adjustable immediately.
The Chamber proposed to reduce corporate tax rate to increase investment in the economy but this has not been considered in the proposed budget. It recommended that corporate tax rate should be reduced gradually taking into consideration 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 people. The Chamber feels that the proposed budget with the Chamber’s suggested amendments will accelerate investment, improve business environment and socio-economic condition of the country.