Staff Correspondent

The Metropolitan Chamber of Commerce and Industry (MCCI) today laid emphasis on scrapping the conditions on cash transactions in corporate tax.

The trade body mentioned that although the corporate tax rate and effective tax rate have been reduced continuously in the past fiscal years, no one is able to enjoy this benefit due to the cash transaction conditions in the Finance Act, 2024.

They said this at a pre-budget meeting with the National Board of Revenue (NBR) held at the NBR office in the city.

NBR Chairman Abdur Rahman Khan and MCCI President Kamran Tanvirur Rahman were present at the meeting.

In his speech, Kamran Tanvirur Rahman said Bangladesh's economy is 80 percent informal, and not fully dependent on banking.

As a result, it is very difficult for large and medium companies to comply with those conditions, he added.

He also said the effective tax rate is extremely high, reaching 40-50 percent in some cases due to tax deductions at source and unauthorised expenses.

"In addition to reducing the corporate tax rate, there is a need to reform the advance income tax and turnover tax policies so that the tax is based on income and not on turnover," he added.

He also emphasised the development of tax administration and the introduction of automated digitalisation to reduce tax evasion and increase revenue.

The Foreign Investors' Chamber of Commerce and Industry (FICCI) also presented their budget proposals at the meeting. Chartered accountant Snehasish Barua presented the proposals on behalf of the FICCI.

Among the key proposals, FICCI emphasized the importance of collaboration with the NBR to create a more integrated tax system that streamlines revenue collection processes and improves the effectiveness of internal revenue mobilization efforts.

FICCI recommended the recognition and establishment of a clear distinction between policy formulation and revenue collection. This separation is seen as a critical step in ensuring greater efficiency, transparency, and fairness in the tax system.

The chamber highlighted the need to shift towards a more robust direct taxation system. They proposed the establishment of a dedicated Data & Analytics Team within the NBR to drive this shift, enabling more effective tax collection and compliance.

In an effort to attract more foreign investments, FICCI suggested optimizing the effective tax rate by withdrawing thresholds for inadmissibility, rationalizing Tax Deducted at Source (TDS), and gradually eliminating the minimum tax. These steps are aimed at creating a more competitive tax environment, ultimately fostering greater FDI inflow.

Recognizing the global shift towards sustainability, FICCI proposed introducing preferential tax rates and excise benefits to incentivize the development of green supply chains in Bangladesh. This would not only align with global trends but also position the country as a leader in green manufacturing.

FICCI recommended the implementation of a unified VAT rate, focusing exclusively on value-added tax.

This would simplify the VAT structure and reduce complexities for businesses while ensuring that the tax system remains efficient and equitable. To further streamline trade and ensure timely business operations, FICCI called for the faster resolution of issues related to imports and exports, reducing delays and increasing the ease of doing business in Bangladesh.

FICCI urged the NBR to ensure the proper classification of raw materials and intermediate goods to prevent higher tariffs. Clear classifications will help manufacturers avoid unnecessary cost burdens, making them more competitive in the global market, it added.