Budget reactions

Businesses express mixed reactions

They're dismayed over corporate tax

FE Report | Published: June 08, 2018 09:35:02 | Updated: June 08, 2018 12:46:50

The country's trade body leaders expressed mixed reactions on Thursday over the proposed budget for the next fiscal year (FY), 2018-19.

Many of them were disappointed for not lowering corporate tax for the non-publicly traded companies, as pledged earlier by Finance Minister A M A Muhith.

Corporate tax at increased rates has been proposed for the apparel sector, which also made them unhappy.

Some trade body leaders expressed doubt over proper implementation of the big-sized budget.

President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Shafiul Islam (Mohiuddin) in his instant reaction said the budget is big in size, but it is implementable.

"There are some challenges in executing the proposed budget, but we have to overcome those."

Mr Mohiuddin said: "If we can ensure proper management, transparency and accountability, definitely we will get a good output from the proposed budget."

He also thanked the government for reducing the corporate tax to some extent.

"We want the government to implement the mega projects without any unwanted delay for greater benefit of the country," said the president of the apex trade body.

President of the Dhaka Chamber of Commerce and Industry (DCCI) Abul Kasem Khan, in his reaction, urged the government to reconsider slashing corporate tax in all categories by at least 2.5 per cent.

In the proposed budget, the government has reduced corporate tax by 2.5 per cent only for the publicly and non-publicly traded banks, insurance and non-bank financial institutions.

He said presently the ratio of private sector investment to the country's gross domestic product (GDP) is 23 per cent.

"If we want to increase it by 1.0 per cent, some Tk 250 billion has to be invested."

Raising the private sector investment will be challenging, if the corporate tax rate is not reduced, he noted.

Mr Khan, however, hailed the proposal of withdrawing double taxation on dividend.

President of the Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI) Nihad Kabir, in her instant reaction, expressed disappointment for not lowering corporate tax for the non-publicly traded companies.

"The finance minister promised of lowering corporate tax for this segment several times. But there is no reflection of that in the proposed budget."

Ms Kabir said the new budget size is 25 per cent higher than that of the revised budget of this fiscal.

But no mentionable tax is increased to mobilise additional revenue for implementing the budget, she said.

According to the minister, new taxpayers will generate resources for implementation of the big budget.

"We expect the existing taxpayers will not be affected for execution of the budget," she added.

President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Siddiqur Rahman thanked the finance minister for proposing an 'employment-oriented' budget.

"The budget emphasised energy and power sector, road development, and capacity building of the ports. I believe it will play a pivotal role in business expansion and employment generation in the future," he told the FE.

However, Mr Rahman expressed dismay over raising corporate tax for the apparel industry.

He said the apparel industry has been playing a vital role in employment generation.

"The proposed tax rate hike will create obstacle in this case."

Mr Rahman urged the minister to review the decision on tax rate hike.

President of the Exporters Association of Bangladesh (EAB) Abdus Salam Murshedy, in his instant reaction, said resource mobilisation will be a big challenge for implementation of the big budget.

He said the budget has proposed to hike corporate tax for the apparel factories having green building certification to 12 per cent from the existing 10 per cent.

The budget also proposed to hike corporate tax for the general garment factories to 15 per cent from the existing 12 per cent.

"The tax hike proposal is not a timely decision, as it will affect our competition with rivals."

Mr Murshedy said the government should reconsider the proposed corporate tax rate hike for the apparel sector.

President of the Bangladesh Garments Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA) Abdul Kader Khan requested the government to bring down the corporate tax rate for his sector to 15 per cent.

He termed the existing 35 per cent corporate tax as burdensome and discouraging for new investments.

"We are working as the backward linkage industry for the apparel sector, and supplying 95 per cent of accessories to it."

He urged the government to offer corporate tax at a unified rate for the backward linkage industry.

syful-islam@outlook.com

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