Due to high tax rates, foreign investors are less interested in investing in Bangladesh. Therefore, the Bangladesh Investment Development Authority (BIDA) and the Bangladesh Economic Zone Authority (BEZA) have proposed to reduce the tax rate in synchronisation with neighbouring countries.
The two organisations made the proposal while participating in the pre-budget discussions for the fiscal year 2022-2023 at the conference room of the National Board of Revenue (NBR) at Segun Bagicha on Thursday (10 February).
Participating in the discussion, Shah Mohammad Mahbub, Director General of BIDA’s International Investment Development Department, said that the average rate in Bangladesh is 40% to 45% as advance tax, source tax, and other taxes are included with corporate tax. But the global corporate tax rate averages 21% to 24%. Of these, 24% is in Malaysia, 20% is in Vietnam and 25% is in Indonesia. Foreigners consider the tax rate of a country before investing in the respective country. Therefore, to attract foreign investment, it is necessary to reduce the corporate tax rate in Bangladesh by synchronising with the neighbouring and competing countries.
He said that at present, for bonded warehouse licenses, foreign managers of any organisation, whether they reside in the country or not, have to submit TIN and PI visas. A work permit is required for getting a TIN. But according to the BIDA guideline, foreign directors have to get work permits only if they work while staying in Bangladesh. Therefore, for bonded warehouse licenses, it is necessary to eliminate the obligation of TIN and PI visas for the operators not residing in Bangladesh.
He suggested bringing various international online media or social media, such as Amazon, Facebook, and Google, under the corporate tax.
He said that the advance tax on dividend income needs to be reduced from 20% to 10% for companies and from 10% to 5% for individuals and the minimum turnover tax on total receipts in the telecom sector needs to be reduced.
Ali Ahsan, an executive member of BEZA’s Investment Development Department, also recommended the reduction of corporate tax in all sectors except cigarettes.
He said that the reduction in corporate tax rates would encourage local and foreign investors. He also said that the annual turnover of up to Tk 3 crores in the SME sector should be given tax exemption.
He said that once the advance tax is paid, it is refunded or adjusted. This increases the complexity of business management including bank interest and liquidity crisis. Therefore, it is necessary to remove the 4% advance tax on imported materials of industrial establishments.
NBR Chairman Abu Hena Md. Rahmatul Munim said, ‘It is not right for foreigners to come to Bangladesh on a tourist visa and earn income. They will come as tourists and spend money here. Why should they worry about earning money? They will not be allowed to work.’
Regarding corporate tax, he said, ‘Corporate tax of some companies is so high and has been waived for such a long time that the activities of that company are often terminated. Even then, if the tax load is excessive, the matter will be considered.’
At the event, BEPZA and Hi-Tech Park authorities made several proposals, including the reduction of various taxes and import duties.
BEPZA’s Executive Director Khurshid Alam said that investors in Uttara, Mongla, and Ishwardi EPZs need to be allowed to import prime movers with duty-free facilities.
