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Foreign Investors' Chamber of Commerce and Industry (FICCI) fears the 'unpredictable, inconsistent and unstable tax policies' of Bangladesh might push back foreign direct investment (FDI) from the country.
President of the trade body Zaved Akhter voiced the fear at a press conference held at a hotel in the capital on Sunday.
"The government has facilitated the establishment of 100 economic zones (EZs) for private sector industries, but now they are withdrawing the tax exemption for the units at the zones just by issuing an SRO nullifying the previous one,” he said.
“The withdrawal of incentives from private EZs and high-tech parks while keeping them for government EZs may erode investor confidence,” said the FICCI president.
The chamber said now the companies that are already in construction and getting ready to go into operation and those that are in the pipeline came in good faith and commitment from the government will go shit to another country which has better policies for FDI.
Speaking at the press conference, the FICCI President appreciated the proposed national budget 2024-25, aimed at supporting the economy amidst challenges.
FICCI sees targets of 6.75 per cent GDP growth and 6.5 per cent inflation as ambitious but achievable with an effective execution plan.
The proposed reforms, especially in income Tax and Customs aim to enhance revenue, reduce deficits, and enhance investor confidence.
FICCI suggested innovative approaches, such as sector-wise revenue analysis and increasing the taxpayer base.
The chamber of commerce welcomed the acceptance of their proposed amendments in the Finance Bill 2024, particularly the prospective tax rate, fulfilling a long-standing demand from the business community.
Maintaining these rates will enable businesses to plan and invest effectively,” said Mr Akhter.
FICCI appreciated tax reforms in the proposed 2024-2025 budget to simplify the tax system.
But high Effective Tax Rates (ETR) remain a key concern for the industry,” said the chamber.
While they appreciated the 15 per cent income tax rate for private funds, they note concerns about exempting public funds from taxation, creating disparities between government and private sector employees.
“Projections indicate an expected GDP growth rise by +93 basis points and a decrease in inflation by +150 basis points.”
Zaved Akhter said detailed implications of deficit financing, such as potential higher interest rates and the need for a balanced approach to ensure fiscal stability, are crucial.
NBR has proposed an increase in the personal income tax rate.
This measure may be seen as unfair by regular taxpayers and could inadvertently encourage tax evasion,” he said.
He said such changes in tax slab will discourage compliant taxpayers as they are being penalized for their hard-earned, also making this retrospective is against NBR's current policy of predictive tax culture hence recommended to restate last year's rate to be applicable for FY25.
The principle of reducing tax rates while widening the tax net aims to create a fairer and more efficient tax system,” he added.
Former FICCI President Shehzad Munim, and Rupali Haque Chowdhury, among others, spoke at the event.