Foreign investment always plays a pivotal role in boosting a country’s economy. In our country’s prevailing economy, encouraging more FDI will lead to transferring technology and creating more employment openings.
Our government always kept Foreign Direct investment (FDI) on the priority agenda. However, enough foreign companies have not invested here because of the high corporate tax rate. We know that regarding investment decisions, foreign firms consider a number of matters such as corporate tax rate, profit ratio, security and promotional expenses.
Now ahead of the fiscal budget 2021-22, our government is willing to take some positive steps regarding encouraging more foreign companies to invest more in Bangladesh. There is a high possibility of boosting foreign investment in the country during FY22.
Relaxations of tax restrictions
are needed to attract more FDIs
It is a very encouraging fact that the government is gradually lowering the corporate tax rate. Such high corporate tax simply discourages foreign companies to invest here. Government should also need to amend a number of other provisions of the Income Tax Act. That includes setting a 0.5 percent limit on the company's promotional expenses and lowering the spending limit on royalties and technical fees to boost foreign investments.
Therefore, more relaxation of tax restrictions are needed to attract more FDIs. The government needs to provide an open, transparent, and reliable environment for all kinds of firms, whether foreign or domestic. This includes, ease of doing business, relatively flexible labour markets, and protection of property rights. We can also launch a promotional campaign to attract foreign entrepreneurs to invest here.
Bangladesh has to be quick in gripping the prospect of improving trade policies and making them more FDI-friendly. All in all, trade policies are needed to be investment-friendly and the overall investment environment should also be enhanced to attract more foreign investments.