A file photo shows clients taking services from the bank officials at a bank in Dhaka. Newly-appointed finance minister AHM Mustafa Kamal has asked National Board of Revenue to review the country’s existing income tax rates for corporate and individual taxpayers. — New Age photo
Newly-appointed finance minister AHM Mustafa Kamal has asked National Board of Revenue to review the country’s existing income tax rates for corporate and individual taxpayers to make them ‘balanced’ and ‘rationalised’ with a view to boost revenue mobilisation, expand tax net and attract investment.
He also instructed the tax authorities to submit recommendations on the issue of budgetary exercise for the next fiscal year 2019-2020.
NBR, as per instruction of the minister, in the past week formed a four-member committee, headed by its member (income tax policy) Kanon Kumar Roy, to analyse the various aspects of tax rates and relevant issues.
The other members of the committee are income tax commissioner Ranjon Kumar Bhowmik, NBR first secretary (income tax policy) Ikhtiar Uddin Mohammad Mamun and central intelligence cell joint director Md Shabbir Ahmed.
Finance ministry officials said that the minister made the instruction to NBR chairman Md Mosharraf Hossain Bhuiyan as part of expediting activities to increase revenue collection and expand tax net as the tax-GDP ratio of the country was very low comparing with countries having similar economy.
They said that finance minister would hold meeting with tax officials soon after returning from abroad and would give instructions in details on the issue and other aspects of revenue mobilisation.
Officials said that Mustafa Kamal had always been in favour of rationalisation of income tax rates for attracting investment in the country.
When he was the planning minister in the immediate past tenure of Awami League-led government, Kamal on several occasions advocated for reduction of the tax rates, particularly for corporate taxpayers, saying that reduction in the rates would boost revenue collection as well as increase more investment from country and abroad, they said.
In September last year, at a programme of Bangladesh-German Chamber of Commerce and Industry in Dhaka, Kamal suggested for reduction of corporate tax rate from current 35 per cent saying that higher tax rates were one of the reasons for low-revenue collection in the country.
Corporate tax rate is much lower in the competitive countries like Vietnam and Singapore where the rate is 15 per cent, he said.
The government in the budget for the current fiscal year 2018-2019 reduced the corporate tax by 2.5 percent age points to 37.5 per cent and 40 per cent respectively for publicly traded and non-publicly traded banks and financial institutions.
The then finance minister Abul Maal Abdul Muhith on several occasions expressed his desire to rationalise the tax rates, NBR officials said.
But, it is difficult to reduce the tax rates due to negative impact of reduction of tax rates on revenue collection, they said, adding that it was also not proven in the country’s context that reduced corporate tax would increase investment.
According to the notification on formation of the committee, NBR said that it would review the existing income tax rates for individual and corporate taxpayers and analyse the possible impact on revenue collection due to any upward or downward revision.
It will also evaluate the necessity of rationalisation of tax rates to make it consistent with international best practices and expand the tax net, the notification said.
The team will also scrutinise the necessity of the move in the backdrop of building a smart tax administration to improve the investment-friendly environment in the country.
NBR asked the committee to submit their recommendations to its chairman within one month.
Source: New Age.
