Corporate tax trim won’t pay off
Despite a 2.5 percentage point corporate tax reduction, listed and non-outlined companies might end up having to pay more tax than that last year because of a fresh plan to boost the tax deducted at source (TDS), explained the ICAB yesterday.
The National Plank of Earnings (NBR) seeks to hike the TDS to 7 % from 5 % for local supply while keeping it unchanged at 5 % at import, said The Institute of Chartered Accountants of Bangladesh (ICAB).
If the contradiction is not addressed, it shall definitely not bring pain relief for local entities encouraging industrialisation and foreign direct investment in Bangladesh, explained Mahmudul Hasan Khusru, president of the apex body of chartered accountants.
The ICAB made the observation at a virtual press conference organised to talk about its analysis on the proposed national cover fiscal 2021-22.
It welcomed the corporate tax decrease, citing that it had been greater than that in equivalent economies, including in neighbouring countries. In a demonstration of proposed methods in the Finance Costs 2021, Snehasish Barua, convener of the ICAB's taxes and rules committee, said the successful tax being charge on import-dependent firms, especially suppliers, will be higher following a TDS hike.
"Change in tax fee could have been extra beneficial to the business enterprise had the price of tax deduction at resource been reduced," he said. He as well cited a fresh rule requiring companies to make repayment of over Tk 50,000 through formal personal channels for sale of raw materials.
This is inconsistent with the provision of VAT and SD Act, 2012 where organizations are required to use formal banking channels for payments of over Tk 100,000, he said.
The ICAB also suggested that the federal government set a higher growth target for the budget, pointing out that obtaining the target required an integrated transition in all areas of the economy, which was difficult however, not impossible.
The institute, even so, said tax exemption in a variety of industries, particularly for agriculture and agro-based industries and on setting up hospitals beyond your major cities would ultimately help create latest jobs.
In addition, it welcomed proposed taxes breaks for cloud solutions, system integration, e-learning platforms, e-book publishing, mobile application development products and services and IT freelancing providers until 2024.
But the body didn't support the proceed to increase tax on cellular financial service providers.
The ICAB lauded advance tax applicable on imported goods for production purposes being reduced to 3 % from 4 %, saying it would decrease the producers' current capital requirements.
