Accounting professionals have suggested reviewing tax exemptions, curbing tax evasion by illegal foreign nationals and offering tax breaks to incentivise one-person-company (OPC).
They also called for bringing down the corporate tax rates by rationalising the withholding taxes (WHT).
The members of the Institute of Chartered Accountants of Bangladesh (ICAB) raised the issues along with other aspects of income, VAT and customs laws during a virtual conference styled ‘Policy paper on direct and indirect tax’ on Saturday.
Planning minister MA Mannan attended the programme as the chief guest.
ICAB president Mahmudul Hasan Khusru delivered his welcome speech while Md Humayun Kabir, member council and past president of the ICAB, chaired the event.
Mohammad Al Maruf Khan, partner, Howlader Yunus & Co and Snehasish Barua, partner, Snehasish Mahmud & Co, presented two keynote papers during the webinar.
Mr Barua said the impact of higher WHT escalates the corporate tax rate than that of legitimate tax liability of a taxpayer.
Although the corporate tax rate is 32.5 per cent for non-listed companies and 25 for publicly listed ones, the applicable tax rate surges to 58 per cent for both due to the WHT, he said.
He proposed to incorporate provision in the tax law to conduct industry-wise uniform reform and levy taxes as per growth of the industry.
“Companies in similar industries are assessed in different way by the different assessing officers for lack of uniform and standardised assessment procedure.” Mr Barua said the ICAB could assist the NBR in developing a standard assessment manual in a bid to reduce disputes relating to arbitrary assessment.
He accentuated the need for better coordination between income tax, VAT and customs wings to cross-check taxpayers’ information.
While framing assessment, an assessing officer takes consideration of the documents and information submitted, he said, adding that time has come to evaluate the external information for tax assessment.
Mr Barua proposed resolution of differences between the International Financial Reporting Standard (IFRS) and the Income Tax Ordinance by constituting a task force.
Tax collection from the sale of shares by local companies could be streamlined through ensuring certified share valuation report by professional accountants, he observed.
His proposals included focusing on tax collection from foreign branch and liaison office, joint-venture companies, reduction of tax deducted at source as per global practice, introduce tax on a prospective basis to help investors’ future business planning.
Mr Barua also proposed to introduce a reduced tax rate of 20 per cent to attract OPC.
The NBR should carry out research and take a strategic decision on exemptions, he cited.
Another keynoter Mr Khan proposed to devise tax measures to promote ‘made in Bangladesh’ products.
Mr Khan singled out some areas, including leather, jute, maslin, nakshi kantha, black Bengal goats to OEM (original equipment manufacturer) and garment fashion design, for those incentives.
He suggested the taxman to track sale of share outside Bangladesh, taxation on digital economy, devise thin capitalisation rule in the tax law, give a specific guideline on merger and acquisition, curb tax evasion by foreign nationals working in Bangladesh and introduce a threshold limit for offering tax benefit to agriculture sector.
NBR member (income tax policy) Md Alamgir Hossain, VAT policy member Md Masud Sadiq and customs policy member Syed Golam Kibria, among others, also spoke.
Mr Sadiq said the NBR brought some changes in the VAT law as per the present context and considering the need for revenue growth of the public exchequer.
Mr Hossain said the NBR is framing a new income tax law addressing inconsistencies in the law.
ICAB president Mr Khusru said the Document Verification System (DVS), introduced by ICAB, would help check cooked financial accounts and ensure transparency.
Planning minister MA Mannan said the tax system should be simplified by reducing steps of tax payment.