The government of Bangladesh has been providing tax holiday facilities in different sectors for the development of trade and commerce in the country. Kazi M Aminul Islam, executive chairman of the Bangladesh Investment Development Authority (BIDA) said this on Sunday.
He was speaking at a pre-budget dialogue on Revisiting Tax Holiday Policy of Bangladesh for Promoting Investment and Export held at the Bangladesh Investment Development Authority (BIDA). Business Initiative Leading Development (BUILD) in collaboration with BIDA organised the dialogue.
The dialogue brought together representatives of government, international organisations, extractive industries, civil society, and think tanks and provided the opportunity to advance the work under the National Board of Revenue.
BIDA chief said, the government is providing the tax holiday facility in different industries, especially industries under the Bangladesh Economic Zone Authority (BEZA), Bangladesh Export Processing Zone Authority (BEPZA) and Bangladesh Hi-Tech Park Authority (BHTPA).
He emphasized on an inclusive development and for standard transformation, he said policy shift is required.
He added that in the less developed areas also there are differences, so a separate categorization can be included to extend benefits for much less developed areas.
He added that there are a number of Merger & Acquisition. Why do these industries not also get TH benefits? Referring examples of TH policies of Philippines, Thailand, Indonesia as referred in the presentation he suggested that Hi-Tech and innovative sector would need to get priorities.
Referring capacity development need of NBR , he emphasized on creating awareness about the existing policies and trust worthy environment for tax collector and tax payers.
BUILD CEO Ferdaus Ara Begum in her study on Revisiting Tax Holiday Policy of Bangladesh for Promoting Investment and Export suggested to revisit the policy for extending support to other new investment sectors with some policy options to ensure maximum benefit from Tax Holiday policy.
Stressing on the need for streamlining the audit system, she said that there could be a specific criterion for break-even analysis plan so that the profitability period can be identified clearly and the tax exemption period start from profit making phase (after break-even) of any enterprises like Thailand.
An inspection guideline should be incorporated in ITO, where environmental sustainability and pollution control criterion can be included while the TH certificate renewal application should be made online (fully automated), she said.
Mohammed Humayun Kabir, former president, Institute of Chartered Accountants of Bangladesh said that there should be a balance between revenue collection and rate of exemption.
Sayed Anminul Karim, former member (Income Tax Policy), NBR said that the income tax policy needs to be revisited to reduce the existing tax gap. Domestic transfer pricing, tax holiday beyond companies such as service can be included in TH policy.
Debabrata Roy Chowdhury, director of Nestle Bangladesh Ltd said: “A performance based awarding TH should be in place and urged that the cleaner enterprises should get TH facility for certain period and accelerated depreciation system need to be continued. Hidden cost of tax holiday which is a discouraging factor needs attention.
Razaur Rahman, senior GM of Envoy Group said that employment and environmental aspects can be considered as major criteria for selecting an industry for TH.
Tax Holiday for non-traditional industries need to be revisited for expanding the export base. A comprehensive analysis of TH and its multiplier effect to the economy need to be done by NBR.
While replying to a number of queries, Kanon Kumar Roy, member (Tax Policy) of NBR agreed to some extent and noted that though it is too late, he would try to accommodate some important proposals in the upcoming Budget. He said that the refund process has been simplified through a recent executive order. It takes seven days to get refund now.
He observed that after initiating the automated income tax from next year, the TH awarding and renewal of TH would be quicker and simpler. He also expressed concern about the decision-making power of NBR regarding capacity development and human resource management.
Abul Kasem Khan, former president, DCCI spoke about competitiveness of industries and underscored the need for considering off-factory issues and logistics arrangement and said that the Tax Holiday for non-traditional industries need to be revisited for expanding the export base.A comprehensive analysis of TH and its cost-benefits effect to the economy need to be done by NBR. He categorically requested for continuation of the Tax Holiday benefits supporting reform recommendations of BUILD.
Echoing the BIDA chief, Hosna Ferdaus Sumi, Private Sector Specialist of World Bank Group requested NBR to adopt tax holidays as one of the instruments to encourage investment and upgrade the doing business ranking.
Humayun Rashid, managing director of Energypac Power Generation and Nabhash Chandra Mandal, executive member of BIDA made welcome speeches.
