Revenue collection target difficult: ICAB
The Institute of Chartered Accountants of Bangladesh (ICAB) has observed that the targeted revenue of Tk 3,780 billion in the proposed budget will be difficult to collect due to the negative impacts of the COVID-19 pandemic.
ICAB president Muhammad Farooq came up with the observation in a statement. “Revenue as targeted Tk 3,780 billion will be difficult to collect due to the negative impact of current pandemic on trade, commerce, industries, import, export and services,” he said.
Farooq also observed that the proposed budget is undoubtedly ambitious and involves lots of challenges in the implementation process. Impediments to on-time implementation of ADP projects should be addressed for achieving the targets of GDP growth.
“We expect that government will finance the deficit from money market without reducing the credit flows to private sectors,” he added.
ICAB president congratulated the government for announcing the Tk 5,860 billion budget.
The institute thanked the prime minister and finance minister for announcing the business-friendly budget. It will help to overcome the current pandemic situation which will pull the economy on track to achieve the targeted GDP growth, it added.
The press release also said ICAB appreciates that the proposed budget of FY 2020-21 has prioritised health, agriculture, social safety net and job creation for recovering from the current crisis.
Corporate tax rate was reduced from 35 per cent to 32.5 per cent which is a relief for the local companies and will also encourage industrialisation and Foreign Direct Investment in Bangladesh.
The threshold of tax-free income has been raised to Tk 300,000 from Tk 25,000 for individual taxpayers and a 5 per cent tax slab has been introduced instead of existing 10 per cent.
The highest tax slab has also been reduced to 25 per cent from existing 30 per cent. This will give a relief to low-income people and encourage disclosing the actual income by tax payers, which will boost the country’s image and global ranking to attract FDI, ultimately bringing positive impact in revenue collection and employment.
In view of the current unusual situation, as an extraordinary measure, ICAB found rationality in widening the areas of investment for previously undisclosed income by paying taxes at the lower rate.
ICAB expects that this extraordinary measure will not be continued beyond the stipulated year.
To curb the under invoicing, ICAB said it appreciates the provision for imposition of penalty at the rate of 50 per cent on the amount of the difference.
However, it will require judicious application, in view of the fact that normal business transactions are not arbitrarily valued for imposition of such penalty.
ICAB welcomes the budget proposal of reducing AT from 5 per cent to 4 per cent for importing materials for production purpose and the extension of time limit from 2 to 4 months to claim both input VAT rebate and decreasing adjustment of AT. This gives more flexibility to businesses.
Amendments allowing businesses to claim 80 per cent of VAT rebate on VAT paid on transportation bill and to claim input VAT rebate for utility bills like WASA, DESCO, Titas etc without Mushak 6.3 are also business friendly move. This will reduce the cost of businesses.
ICAB also observed that amendments restricting the time for using the materials, purchased or imported, within 4 months is impracticable proposition and will be difficult to monitor and may increase the disputes and harassments.
The existing provision in this regard was better to cater the purpose. ICAB therefore suggest deleting the proposal. Increase of disputed VAT deposit at the time of filing appeal to First Appeal and VAT Appellate Tribunal from 10 per cent to 20 per cent will pose a big burden for the business. This should be kept as it is.