Businesses seek tax relief, govt gets clench-fisted for constraints

Gone are the days of tax exemptions and rebate as the government is under significant pressure to increase revenues, says the finance adviser as businesses seek cut-down taxes in forthcoming budget.

"Many are demanding tax breaks in the budget but they must understand government's pressing need for domestic revenue mobilisation," Dr Salehuddin Ahmed said Wednesday at a pre-budget consultation with Bangladesh's top business leaders.

The National Board of Revenue (NBR) and the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) jointly organised the consultation at a hotel in Dhaka -- as budget-making process peaks up

National Board of Revenue chairman Abdur Rahman Khan also echoed the views of the plain-spoken custodian of exchequer under the interim government that struggles to navigate long-accumulated financial deficiencies.

The government is not able to cut tax rates for corporate and individual taxpayers in the upcoming fiscal year as tax cuts have reached maximum levels with gradual reductions," the finance adviser told the meet, where businesses also sought cheaper fuels with uninterrupted supply.

Rather, the revenue authority will consider ensuring ease of doing business addressing key issues, including allegations of harassment.

Commerce Adviser Sheikh Bashir Uddin and Bangladesh Investment Development Authority (BIDA) Executive Chairman Chowdhury Ashik Mahmud Bin Harun were special guests at the meeting, presided over by the NBR chairman and moderated by FBCCI administration Hafizur Rahman.

Turning to worldwide tariff tumult, the finance adviser hinted at seeking more time from the Trump administration beyond its three-month pause for tariff hike.

The commerce adviser said the upcoming budget would be 'target-based' instead of earlier 'expenditure-based', deploring the fallen previous government's celebration of budget as 'grand festival of expenditure'.

Hafizur Rahman urged restoring confidence in business and trade through consistent policy props.

Finance adviser Salehuddin, however, expressed his willingness to try to meet business leaders' demands in the budget as much as possible.

The BIDA chief suggested that the businesses place concrete budget proposals so that the government can work on that intensively.

Meanwhile, NBR officials Wednesday protested some of the provisions of a draft ordinance on bifurcation of the revenue authority. Initially, they had decided on work stoppage but later dropped it.

A number of tax, customs and VAT officials alleged "conspiracy" by administration-cadre officials to undermine revenue cadres.

At the programme, the finance adviser said the ordinance had been drafted but, in case of any gap identified, the government would address it.

The business leaders called for effective enforcement of laws, elimination of unnecessary harassment, an end to bribery and the provision of affordable gas and electricity, in addition to advocating for various tax-related incentives, to ease business operations.

Md Hazizur Rahman, Administrator of the FBCCI, presented an overview of the key demands from the business organisations under the federation, while leaders of various chambers and associations also shared their specific requests.

Hazizur Rahman proposed increasing the tax-free income limit for individuals to Tk 0.45 million, an increase of Tk 0.1 million from the current threshold at Tk 0.35 million, considering inflationary trends and the real income of lower earners. Additionally, he proposed a Tk 0.5-million tax-free income limit for women and senior citizens.

He proposes reducing the rate of tax deduction at source (TDS) on all exports, including ready-made garments, from 1.00 per cent to 0.50 per cent, and maintaining this rate for the next five years.

"Raising the VAT rate from 5.0 per cent to 7.5 per cent for all local supplies of goods will burden small and medium businesses," he told the consultative meet and recommend setting a uniform VAT rate of 2.0 per cent for local-level goods supply to support SMEs.

Bangladesh Textile Mills Association (BTMA) President Mohammad Shawkot Aziz Rasel said at the event that businesses were being forced to pay hefty bribes to release bank guarantees used for clearing goods at ports, despite the actual tax amount being significantly lower.

He explains that while the BTMA previously handled the issuance of release certificates, this responsibility has since been transferred to customs. "Now, we must pay Tk 50,000 in bribes for each guarantee release, whereas the actual tax would have only been Tk 30,000," Rasel said.

Drawing attention to the ongoing power-and gas crises, he noted that a 6.0-percent duty is currently imposed on fuel imports and urged its removal to help reduce gas prices. He also urges the government to extend current corporate-tax facilities until 2028.

Mostafa Kamal, Chairman of Meghna Group, said at the event that bank accounts and tax files are being repeatedly summoned. He remarked that such actions can occur at any time, and noted that incidents of harassment increased following the regime change.

Emphasizing ensuring supply of gas and electricity he said that his Meghna group of businesses invested over $600 million in establishing economic zone in Cumilla, but the connections of utilities are yet to be confirmed for the last two years.

BKMEA President Mohammad Hatem pointed out that although export-oriented goods are exempt from VAT, trucks are still stopped on the roads for challan verification. He calls for abolition of the challan requirement to prevent such disruptions.

Masudur Rahman, President of the Steel Manufacturers Association, urges the government to provide domestic investors with a one-stop service similar to that offered to foreign investors, aiming to reduce "bureaucratic harassment".

The representative of Dhaka Chamber stated that revenue from just two districts is currently meeting the financial needs of all 64 districts in the country. He emphasized the need to expand the tax net, particularly by bringing the informal sector under taxation.

The representative of Metropolitan Chamber of Commerce and Industry said the businesspeople are currently bound to pay tax higher than the government-imposed rates.

He emphasizes reducing effective tax rate through harmonization of taxation system through ensuring digitisation.

Md. Anwar Hossain, Administrator of BGMEA and Vice-Chairman of Export Promotion Bureau (EPB), asked for bonded-warehouse facilities for all of the export industries.

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