Govt has to generate internal resources to increase tax GDP ratio: ICAB 

The leaders of the Institute of Chartered Accountants of Bangladesh (ICAB) on Wednesday said that there would be no alternative for the government to generate internal resources to increase the tax GDP ratio.

They said according to the Vision 2041, the government has set a target of raising the tax GDP ratio to 21.9 per cent. The National Board of Revenue (NBR) has set a target of raising the tax-GDP ratio from 7.8 per cent to 9.5 per cent by 2026 through collecting additional revenues of Tk 2.34 trillion, although this target is difficult to achieve.

The ICAB leaders said this at a press conference Wednesday at the Institute after submitting their proposals for the next budget for FY24 before the NBR today, said a press release.

Chief executive officer of ICAB Shubhashish Bose presented the welcome speech at the press conference while ICAB president Md. Moniruzzaman gave a summary of its proposals. ICAB member Snehasish Barua, Partner, Snehasish Mahmud & Co., Chartered Accountants gave details of ICAB’s budget proposals through a power-point presentation.

The question and answer session of the press conference was conducted by Md. Humayun Kabir, council member and former president of ICAB and chairman of Taxation and Corporate Laws Committee, ICAB.

ICAB vice president MBM Lutful Hadee, council member NKA Mobin, Mohammed Forkan Uddin, Maria Howlader and chief operating officer Mahabub Ahmed Siddiqui were also present.

ICAB’s national budget proposals on income tax were on raising revenue and income tax ordinances; reducing discrepancies and loopholes in the laws; and ensuring transparency in the application of the law; Value Added Tax and Supplementary Duties Act; Customs Law; and related regulations.

DST provision is being introduced for digital services of all global companies operating in Bangladesh. Apart from this, ICAB welcomed the initiative of launching PSR.

Digitalisation of tax system and integration of various relevant departments will revolutionize the tax department. From the filing of the return to the acknowledgment of its receipt, information on tax deducted at source, information on advance tax deduction and unpaid tax will be provided through the process.

Presently the corporate tax rate has been reduced to 27.5 per cent. But, in case of various businesses like import of raw materials, payment of supply charges, which are paid to non-resident taxpayers, tax is deducted at source at a high rate. So, in all these cases tax deduction at source has to be rationalized, ICAB mentioned in its national budget proposals.

The ICAB said the governments of every country adopt a policy called principal of economy, which means avoidance of high expenditure incurred for collection of taxes. So, in Bangladesh, there is a need to increase the tax revenue by avoiding such unnecessary expenditures.

Adopting a holistic digital approach rather than partial digitalisation will increase the collection of value added tax. At present, only the process of registration and tax return submission is possible online. Efforts should be made to digitize other stages of this process.

In order to reduce cost of production and harassment of tax payers, ICAB feels that advance tax should be waived on raw materials/equipment used by companies registered for value added tax/VAT as manufacturers or service providers.

ICAB’s salient recommendations regarding the Customs Act, 1969 are special bond facility to facilitate export diversification, introduction of central bond facility for exporters located outside the bond facility provided to disguised exporters.

“We can determine the duty correctly by following the correct procedures of the Tariff Act and following the currency exchange rate,” ICAB president Md Moniruzzaman said.

He said that the global market provides all the information on various commodities which can be collected to create a database of imported goods and exported goods in NBR system. “From those databases, it is possible to make an estimate about the respective duty rates and prices of the commodities. Tariff policy, tariff rates should not be changed frequently. If long-term policies are introduced, importers will get advantage in terms of forecasting and the image of the country will be brighter,” Moniruzzaman added.

In view of the introduction of this DVS system, a framework has been established in the preparation of financial statements. In this case, NBR should monitor whether the officials of Tax Department, Value Added Tax Department and Customs Department are following this procedure effectively and efficiently. As a result, ICAB believes that the ratio of tax to GDP will increase many times.