Leading trade bodies welcome tax cuts

Leading organization associations yesterday lauded the government's proposed budgetary actions, but remarked that implementing those will be a major challenge.

The reaction came a time after Finance Minister AHM Mustafa Kamal proposed the Tk 6,03,680 crore national budget, offering a cut of 2.5 percentage issues in corporate taxes for stated and non-stated companies and tax exemptions for many sectors to promote investment in manufacturing.

In its response, the Metropolitan Chamber of Commerce and Industry (MCCI) said the proposed budget for another fiscal year 2021-22 was courageous and forward-looking in many aspects, but its appropriate implementation would face key challenges.

The budget focuses on health, agriculture, recruiting, rural development, job creation, and continuation of the stimulus packages, it said in a statement, adding these steps were commendable.

However, the major issues in proper implementation and ensuring the caliber of public spending must be addressed if the nation is to get the full advantages of the proposed budgetary allocations and incentives, it stated.

The MCCI said the upcoming fiscal year could possibly be probably the most challenging years from the perspective of fiscal management due to the economic slowdown due to the Covid-19 pandemic.

"Revenue mobilisation is a daunting task," said MCCI President Nihad Kabir in the affirmation.

Besides, the budget has not indicated any particular reform and restructuring of the taxes policy and tax administration to enhance associated capacities and deliver the right sort of public services, which will increase revenue collection without overburdening the compliant taxpayers.

The MCCI suggested adopting an interim analysis system for the spending budget every 90 days for another year in order that, if required, it may be restructured and revised accordingly.

"As there are still so various unknowns to be handled regarding the pandemic and its own ongoing effect on society and market, the necessity of the hour is versatility to deal with situations and requirements swiftly because they arise," she said.

The MCCI urged the federal government to utilise all obtainable channels to pursue all different lower-cost sources of funding being offered internationally so that you can reduce the pressure on domestic reference mobilisation.

It, even so, opposed the plan to boost the corporate tax fee for mobile financial provider (MFS) service providers, citing that the sector was first at a nascent level of development found in Bangladesh.

Increasing their tax rate steeply through the pandemic may cause a slowdown of the growth of the MFS companies and send an incorrect signal to investors and users as well amidst all the confident signals of the budget, said the MCCI.

The Foreign Shareholders' Chamber of Commerce & Market (FICCI) lauded the proceed to reduce corporate taxes and tax exemptions for agro processing and IT-related industries.

"The chamber also remarkably appreciates the government's plan to vaccinate 80 percent of the populace in phases against the novel coronavirus," it stated.

The FICCI, nevertheless, said it would have already been happier had the federal government withdrawn the 2 2 percent minimum amount tax on telecom, 1 percent on tobacco, 0.twenty five percent on individuals and 0.6 percent on others.

The Bangladesh Chamber of Industries said the private sector would take advantage of the tax reductions and exemptions.

It urged the government to continue lessening the organization tax rate within the next three fiscal years.

Bangladesh Frozen Foods Exporters Association (BFFEA) demanded a reduction of source tax on export of frozen shrimp and other fish to 0.twenty five percent from today's 0.50 percent.

The BFFEA also urged the government to boost the cash incentive on export of frozen shrimp to 20 percent from 10 percent and incentive on export of other fish to 10 percent from 5 percent.

In a separate statement, Business Initiative Top rated Development said the budget appears to have done well in addressing the existing situation and is forward-looking, taking into consideration the "Manufactured in Bangladesh" concept.

This can not only help businesses to diversify but also pave the way for the country's graduation from least developed to a developing country, it said.