The Bangladesh Investment Development Authority (BIDA) has reasons to be worried by the country's declining position in the World Bank Group's 'Ease of Doing Business (EODB) Index'. As an investment promotion authority, the agency is, apparently, finding it rather difficult to shore up prospects of foreign investments in the country. While many countries have improved their ranking by making necessary adjustments on 10 indicators included in the EODB, Bangladesh has been found wanting in this area. Its slide on the scale has been consistent. The country is now ranked 176th among 190 countries in the Index, the lowest in South Asia.
Undoubtedly, Bangladesh with its current state of development does deserve a better position in the EODB Index. But that would not happen automatically and there has to be improvements on the indicators that form the basis of the Index. The country is still doing badly in different aspects of business cycle such as availability of electricity and credit, time consumed in getting property registered, process involved in paying taxes and getting contracts enforced.
Of the EODB indicators, paying taxes is one that is of special interest to existing as well as prospective investors in any country. That is why a time-bound action plan, reportedly, prepared on the basis of consultations among the key stakeholders from both private and public sectors, has envisaged carrying out certain reforms in areas of taxation. The objective is to make tax payments by businesses easy and hassle-free. The action plan sets the task for the National Board of Revenue (NBR) to implement seven major reforms within 12 months and two more in 24 months.
Businesses have an aggrieved feeling because of multiple audits carried out by multiple tax authorities, including income tax, customs and value added tax (VAT). The action plan has suggested conducting single joint audit on the basis of unified audit module. Other suggestions in areas of taxation are well defined in the action plan that has been sent to the NBR recently for implementation. The BIDA has cited examples of how a number of countries, including Thailand, Vietnam, Mozambique and Egypt have improved their paying tax indicator on the EODB Index.
Hopefully, the NBR would attach due importance to the BIDA's action plan that, if implemented, would help the country garner greater volume of domestic as well as foreign investment. It is no secret that investment has remained almost stagnant in recent years. There has to be notable improvement on almost all indicators of the EODB, including tax payments. However, tax payments would become easier if both taxmen and businesses become fair in their dealings.
Businesses do need to prepare their financials following the best international auditing practices while taxmen should do their best to make payments of taxes easy and hassle-free for businesses. Here, it is important to note that doing reforms in isolation is not a tenable option. In most cases, those prove to be unsustainable. Reforms are possible when the entire state machinery is ready for it with the avowed intent of ensuring good governance at all levels.