High earners from fish and poultry hatchery as well as fish farming are likely to lose the privilege of income tax reductions from fiscal 2021-22 as the government plans to introduce a new slab to collect more taxes from fish and poultry farming entrepreneurs.
Taxpayers earning over Tk 30 lakh yearly may require to pay 15 per cent tax from the present 10 per cent, said finance ministry officials.
The hike in the top income bracket comes as the National Board of Revenue (NBR) looks to increase tax collection for the next fiscal year and curb scopes of evasion.
There is an allegation that a section of people show higher incomes from aquaculture to enjoy reduced tax benefits on fish farming which the government offers to encourage employment and increase availability of fish protein.
In a letter to the NBR in January this year, the Anti-Corruption Commission (ACC) asked to verify income sources shown by many taxpayers in their returns, including fish and poultry farming.
Up until now, incomes of up to Tk 10 lakh from fishery, shrimp and poultry hatchery and fish farming had been tax-free.
Only 5 per cent tax is payable on the next Tk 10 lakh in income. On annual incomes of over Tk 20 lakh, only 10 per cent is payable as tax, whereas the highest rate of tax for an individual is 25 per cent.
The tax authority introduced the concessional tax rate first in July 2013 for two years to encourage diversification and increase production of fish to address nutrition deficiency in the country.
The original concession was 3 per cent tax on any amount of income from fish farming. But some businesspeople, politicians and even government officials abused the privilege, said taxmen earlier.
The abuse was tricky to catch as it is difficult to assess fish stocks in ponds, which made it easy for corrupt people to claim any amount of income from fish farming.
And the abuse went as far as people who did not even own fish farms were claiming income from the business to evade taxes, said taxmen.
To curb the malpractice, the NBR scrapped the reduced tax rate for the sectors by the end of 2014 but it had to reinstate the privilege from July 1, 2015 in the face of pressure from various interest groups.
Now, the finance ministry officials said they want to collect tax from high income earners of these sectors.
“We are not planning to impose any new tax burden on small and medium fish farmers,” he said.
However, Md Tariqul Islam Zaheer, managing director of Shundarban Shrimps, a semi-intensive shrimp farm at Dakop, Khulna, said fish farmers suffer from losses for factors, including natural calamities.
“However we cannot realise our investment as we do not get any insurance coverage,” he said.
“It will be frustrating for genuine fisheries entrepreneurs like us. Many of us are highly indebted for losses for natural calamities and low revenue. At this moment, a hike in the tax rate will affect us.”
He suggested the tax authority increase supervision to curb fraudulence attempts at evading tax.
Over the past two decades, Bangladesh saw a massive expansion of aquaculture to meet increasing demand for fish for population growth and rising incomes.
Aquaculture area doubled to 8.21 lakh hectares in fiscal 2018-19 from 4.12 lakh hectares in fiscal 2001-02.
Production grew threefold to 24.88 lakh tonnes the fiscal 2018-19 from 7.86 lakh tonnes in fiscal 2001-02, showed data from the Department of Fisheries.
Cultured fish accounted for 57 per cent of the 43.88 lakh tonnes of fish produced in fiscal 2018-19. The ratio was 42 per cent in fiscal 2001-02.