Turn some stimulus into grant: FBCCI
The country's apex trade body yesterday demanded that the federal government consider giving away some of stimulus funds as grants if lockdowns persist within the next quarter, reasoning it had been difficult to recuperate business from the pandemic-induced losses.
The federal government in April last year announced stimulus packages for banks to disburse low interest rate loans among industries to assist recovery.
Till date, the federal government declared Tk 124,000 crore in funds in its bid to shore up the confidence of entrepreneurs in the wake of global and local financial losses.
In a proposal for tax and other measures necessary for businesses to recuperate and grow in fiscal 2021-22, Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) President Sheikh Fazle Fahim urged for taking into consideration the grants which range from 5 % to 50 %.
He was addressing a virtual meeting jointly organised by the National Board of Revenue and FBCCI as part of a regular gross annual exercise to listen to views of businesses prior to the formulation of fiscal measures for a fresh year.
Top leaders of trade bodies and business chambers, government high-ups, experts, exporters and importers attended the meeting where Finance Minister AHM Mustafa Kamal was also present.
The FBCCI president suggested a 5 per cent grant be provided to large scale industries and for export-oriented sectors while 50 % to the cottage, micro, small and medium enterprises (CMSMEs) and agricultural sector.
So far, the government announced Tk 30,000 crore in stimulus for large-scale industries, Tk 20,000 crore for CMSMEs, Tk 10,500 crore for export-oriented sectors and Tk 5,000 crore for the agricultural sector.
Fahim also recommended that the tax authority reduce value added tax (VAT) and advance tax (AIT) using sectors.
He also suggested that the government opt not to choose more lockdowns.
Instead, he demanded strengthening health safety management to ensure that no physical, mental and economic pressure is imposed on the persons during such crisis.
"Because lockdowns aren't sustainable," he said.
The FBCCI also urged that the federal government to provide one % as an incentive to banks which succeeded in disbursing their respective portions of the funds promptly.
Fahim said the budget should be formulated to handle the challenges accrued because of Bangladesh's upcoming United Nations status graduation from a least developed country to a developing country.
In this connection, the FBCCI demanded withdrawal of the AIT from all types of businesses for another two years.
The apex trade body also demanded reduced amount of corporate tax by 2.5 percentage points from today's 32.5 %. In addition, it appealed for a further reduced amount of tax for listed companies from last year's rate of 25 %.
He also suggested that the federal government ease usage of finance for companies and traders and check hidden charges imposed by banks on businesspeople.
Rupali Chowdhury, president of the Foreign Investors' Chamber of Commerce and Industry, demanded continuation of financial supports for the CMSMEs through the creation of a good database of such firms.
Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association, demanded increasing cash incentives for non-traditional markets to 5 per cent from 4 per cent and reducing tax at source to 0.25 %.
He also urged eliminating the submission of taxation statements and VAT on a myriad of materials used for exports.
He also demanded a 10 % incentive on export of garment items manufactured from non-cotton fibres mainly to encourage local garment exporters to using manmade fibres as the demand for garments from such fibres is soaring worldwide.
Mohammad Ali Khokon, president of the Bangladesh Textile Mills Association, sought fixing VAT at Tk 3 per kilogramme on sales of all types of yarn for narrowing the discrepancy between manmade fibres and cotton yarn.
Currently, the government takes Tk 6 per kg as VAT on the sale of manmade fibres but Tk 3 per kg for cotton yarn.
He also suggested treating exporters equally when offering cash incentives.
Md Jashim Uddin, president of the Bangladesh Plastic Goods Manufacturers and Exporters Association, said the earnings collection growth ought to be 20 per cent instead of the 35 % targeted every year because usually 10 % to 15 % was achieved.
Shafiul Islam Mohiuddin, former FBCCI president, said the VAT on manmade fibre sales ought to be zero % and at the same time the government's policy continuation was very important.
While chairing the discussion, NBR Chairman Abu Hena Md Rahmatul Muneem said the next budget will be formulated targeting to save lots of local industries, trade facilitation and expansion of the tax net.
However, tax dodging through the fabrication of multiple audit reports by a section of companies might become impossible because the auditing system had been automated, he said.
A trade-off is necessary in some cases within the next budget as a result of Covid-19, said Finance Minister Kamal.
It is extremely difficult to reach a balance between revenue collection and reducing the taxes from different sectors, he said.
