Road to Prosperity: Equitable Tax Regime for Businesses – Local & Foreign
-
02 May 2019
-
12:30 pm
-
The Westin Hotel, Dhaka
Guest of Honor and Speaker: Mr. Md. Mosharraf Hossain Bhuiyan, NDC
Chairman, National Board of Revenue (NBR) & Senior Secretary, Internal Resources Division, Government of the People’s Republic of Bangladesh.
AmCham president Md. Nurul Islam chaired the meeting and delivered welcome remarks in the meeting. The chamber president said equitable tax policy is of vital importance for the economic progress of the countries that have a policy of private sector-led growth. He also added that the taxation should be based on a person or entity’s ability to pay, thus helping the growth of revenue and supporting greater spending on developing projects and creating jobs. Mr. Islam said tax avoidance obviously goes against the principle of tax equity and it disturbs level playing field in the corporate world. “It is, therefore, very important that the NBR enforces an equitable tax policy for business, both local and foreign. Level playing field is important for attracting and retaining foreign direct investment in the country,” he added. He also urged government to create enabling environment for foreign direct investment and in doing so ensuring fair, reasonable, relatively stable and avoidance of arbitrariness of adjudication by officials. He appreciated the recent announcement of the government at a meeting between NBR and Federation of Chamber of Commerce and Industry that the tax rate would be reduced gradually in next five years, no change in tax policy in middle of year by SROs and stop of harassment of taxpayers.
The Guest of Honor and NBR chairman, Md. Mosharraf Hossain Bhuiyan, in his remarks said Bangladesh has adopted an equitable tax policy for all and no foreign investors face discrimination here. In order to continue with the development activities, he said, Bangladesh needs foreign direct investment (FDI) in higher volume. That’s why investment is being facilitated here by taking favorable policy measures, he added. “And all the policies we adopt are more or less equitable. We don’t discriminate foreign country (investors) vis-a-vis domestic investors,” Mr. Bhuiyan said. He said due to this equitable policy, they cannot practice the policy of “adequacy” in which taxes should be paid to the government in such a way that the revenue generation through that amount of taxes should be adequate for the government for running the development activities. He said Bangladesh is now a ‘country of miracle’. Many of the economists, experts, and think tanks all over the world were skeptical about the data of growth, per capita income, and GDP of this country. But now it has been proved that the figures that have been declared sometimes are even lower than actual because of the informal economy of this country which are not being reported, he said. Mr Bhuiyan also said the country is progressing at a very good pace which is being reflected in money circulation, expenditure pattern as well as employment generation in the country.
The economic growth for the last 10 years was highest since the country’s independence, he added. During the last five years, the growth was seven-plus percentage point while it was six-plus percentage point in the previous five years. This fiscal year the growth is expected to be over 8.0 per cent. The per capita income has also increased, he noted. Mr Bhuiyan said Bangladesh’s tax-GDP ratio is one of the lowest in this region which is only 10 %. “The main reason of low tax income is tax avoidance by many who are eligible and have the ability to pay. We are now going door-to-door to expand the tax net,” he noted. While speaking at the meeting, the NBR chief also pointed out that investors of some countries enjoy the benefits of double taxation avoidance. He also said the government is comfortable with foreign companies here in a sense that their record keeping, as well as declaration of profits, are very transparent. In terms of revenue generation, they are also contributing to a great extent to the economy, he said. Despite barriers, Bangladesh has been maintaining good position in exporting products in US market, said Mosharraf, adding that the country’s export to America could have grown further along with increased profitability and competitiveness if the policy were equitable. The NBR chairman, raising question that why Bangladesh would pay 15 per cent taxes in exporting its products in US market while the Vietnam, being a country with same status like Bangladesh, were getting access in the market with 7-8 per cent taxes. Mr Bhuiyan brushed aside a complaint that corporate tax rate in Bangladesh is very high. “Our analysis found that in many countries, the corporate tax rate is much higher than Bangladesh. Even our corporate tax is lower than that of India. In case of listed companies, our corporate tax is also lower than others,” he noted. But he admitted that in case of tobacco, Bangladesh’s corporate tax is high and he explained that “this is the principle we follow to discourage tobacco production as well as consumption.” “But I think tobacco companies are comfortable with our policy,” he added. He also admitted that cell phone companies are taxed a bit higher.
Policy Research Institute chairman Zaidi Sattar , in the open floor session, said that the government was imposing taxes on products for two reasons — one for revenue purpose and another one for protection purpose — and country’s consumers were paying protection taxes as well. ‘It’s time to apply equity principle so that the consumers can get relief from paying high taxes,’ he said. The taxes which were imposed to fulfill the protection objective of the government were also hurting the country’s export diversification and expansion, he added. The NBR chair asked the AmCham leaders to find out the discrepancies where investors as well as importers are directly affected and give him the list. “We’ll examine that,” he said, adding that in the upcoming budget they would try to give the similar benefits that the readymade garment exporters are enjoying to other exporters to encourage diversification.
