“The area of investment of black money could be expanded in the agricultural and infrastructure development. People are allowed to invest undisclosed money without facing question this year, but it should be made clear that what would happen if anybody raised question after that year”, said Dr Mashiur Rahman, adviser to the PM on Thursday.
Dr. Mashiur made the remarks while addressing a post-budget discussion, jointly organised by the Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI) and the Policy Research Institute of Bangladesh (PRI).
MCCI president Nihad Kabir moderated the zoom meeting, attended by economists, policymakers and business representatives.
Taking part in discussion on the occasion, business leaders alleged that the changes in VAT measures in the budget have turned the relevant law into a business-unfriendly statute. They said the 2012 VAT law has been transformed into the 1991 version after changes in the budget for upcoming fiscal year.
The new VAT law was implemented on July 01, 2019 replacing the previous one.
Speaking at the discussion, co-hosted by Resurgent Bangladesh, MCCI tariff and taxation subcommittee chair Adeeb H Khan said the provision for claiming credit of the paid VAT on raw materials has been made on the basis of consumption, which is a "disaster" for businesses.
"The input tax credit will now be based on the portion of input consumed in a tax period for taxable supplies," he said.
The basic principles of new VAT law have been eroded with the input credit restrictions, he argued.
"The provisions of declaring input output coefficient should also be deleted from the VAT law as it is a sort of faulty price declaration method of the previous VAT law," he said.
Input output coefficient is a provision in the VAT law, which the manufacturing units have to submit notifying the tax officials of the quantity of raw materials needed for production.
Private sector adviser to the Prime Minister Salman F Rahman agreed, noting the changes in VAT law went against the basic principle of VAT law and destroyed the entire concept of new law.
He said the chamber bodies should sit together and come up with comprehensive proposals for the changes required in the budget to be passed by June 30.
He also termed increase of advance income tax (AIT) and tax deducted at source a 'regressive measure'.
Mr Adeeb said the base of withholding tax (at source) has been increased in the budget.
He hailed the reduction of corporate tax rates, but termed it 'theoretical' unless the withholding taxes remained unchanged.
Planning minister MA Mannan said the issues relating to tax on internet uses and transformation of VAT law could be addressed in the budget.
Abul Kasem Khan, chairperson of BUILD, underscored the need for devising tax measures to boost employment and enable businesses to reinvest.
Dr MA Razzaque, research director of PRI, gave a detailed presentation on the macro-economic aspects, investment, export, allocation in the budget.
