Tax holiday until ’13 with some changes: Muhith

FE Report

Finance Minister AMA Muhith Sunday said the government will extend tax holiday facilities until 2013 with some changes in respect of the units that are currently enjoying the benefit.

He said the government is not in favour of tax holiday facilities as it wants to develop tax payment culture.

Tax holiday facility is scheduled to expire on June 30, 2011.

"Reduced tax is an effective mechanism to replace the tax holiday facilities. But, we have to continue the facility until 2013, but not further. All will have to pay tax at reduced rate after the period," he said.

The finance minister said this in response to proposals of the business community in a budget consultative meeting of the National Board of Revenue (NBR).

The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) and NBR jointly arranged the 32nd meeting of the consultative committee at a city hotel.

The finance minister also declared bond licence facility for two years from existing one year, setting up of a separate bond commissionarate next year, merger of import and export house of the Chittagong port by this year.

Muhith also promised to provide special incentives for woman entrepreneurs and SME (small and medium enterprises).

He said main job of banks is to provide current loans instead of investment in share market.

On property tax, Muhith said the government will have to introduce wealth tax as income gap between different sections of people is widening fast.

"At the beginning, wealth tax should be imposed cautiously so that the people will not feel additional pressure for the tax measure," he said.

Responding to complaints of businessmen on higher lending rates, Muhith said the issue could be settled by the market players instead of the government.

"The government earlier intervened on the lending rates to help the industry cope with the global recession but it cannot continue for unlimited period," he said.

On demands of exporters for offering tax-benefit, the finance minister said the exporters are already enjoying different tax benefits from the government.

"Now, exporters should be matured enough to give benefit to the government," he said.

The government will take cautious move on offering tax facilities to exporters, he said.

He welcomed the proposal on encouraging more Public-Private Partnership (PPP) initiatives saying that the initiative saw a success in the second year of its inception.

He said PPP will need more than Tk 30 billion in the next fiscal.

"We want foreign direct investment but those are not coming proportionately. Investors are taking out money from the market," he said.

Muhith said the government is revising the law on Corporate Social Responsibility (CSR) to encourage investment in public welfare.

On duty-free import of cars by the Members of Parliament (MPs), the finance minister said it is embarrassing for lawmakers.

"I have tried to give cars for MPs from government but failed to materialise the plan," he said.

For poultry sector, Muhith said tax holiday facility will be extended to 2013 for poultry industry.

Muhith said the government is focusing on combating rent seeking by introducing recorded transaction through VAT law.

He said in the next fiscal tax differences between industries inside and outside EPZ will be streamlined.

The upcoming budget will offer some provisions to encourage industrialisation in district towns, he added.

Earlier, business leaders requested the government to continue tax holiday facility and pre-shipment inspection system (PSI).

They also pleaded for a cut in higher lending rates of banks, withdrawal of tax on rented space and an end to discrimination, in terms of government facilities, between industries located within and outside the export processing zones.

The business leaders proposed the measures for 2011-12 FY in a meeting of the budget consultative committee jointly arranged by the National Board of Revenue (NBR) and the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) in the city.

Finance minister AMA Muhith, NBR chairman Dr. Nasiruddin Ahmed and leaders of country's all chamber bodies attended the meeting.

FBCCI president AK Azad, who moderated the discussion, demanded of the government to take stern action against the people who had siphoned off Tk 20 billion from the share market.

"The proposed tax law has strict rules to harass businessmen while some big players, who have cheated the general investors, have remained untouched," he said while demanding withdrawal of the tax measure that allows taxmen to send businessmen to jail for tax evasion.

"Banks are charging high lending rate of 14 to 16 per cent which should be fixed at 12 per cent," he said.

Azad proposed to the government to expedite development works and take initiatives in gas sector as it is lagging behind compared to power sector.

He said the country will have to set up coal and gas-based industries and come out of the subsidy-culture.

He said there is a proposal to set up coal-based power plant near Mongla and a memorandum of understanding has also been signed with India to this effect.

The project should be implemented soon by overcoming bureaucratic bottlenecks as the World Bank will provide loan at lower rate, he said.

AK Azad also proposed introduction of e-governance in all ports of the country, reduce systems loss in gas and power sector, bring losing state-owned companies under PPP, and strengthen the Anti-corruption Commission.

On property tax Azad urged the government to examine the pros and cons of the tax before implementing it.

He also urged the government to reduce import duty on basic raw materials and capital machinery.

Former FBCCI president Mir Nasir Hossain urged the government to allow all exporters to enjoy reduced 4.0 per cent income tax like their counterparts in the readymade garments.

Foreign Investors' Chamber of Commerce and Industry (FICCI) president Hamim Rahmatullah said the government should frame long-term fiscal policy to encourage foreign investment.

He also demanded strict measures to check under-invoicing to ensure level-playing field for all businesses.

Dhaka Chamber of Commerce and Industry (DCCI) president Asif Ibrahim requested the government to extend tax holiday facilities until 2015, offer same facilities for export-oriented industries located both inside and outside Export Processing Zones (EPZs)

Monwara Hakim Ali, president of Chittagong Women Chamber demanded of the government to grant tax holiday facility to women entrepreneurs.

Bangladesh Textiles Mills Association (BTMA) president Jahangir Alamin said the government should waive all kinds of taxes on machinery and chemicals of effluent treatment plant (ETP) to help industries install the plant.

Abdus Salam Mushedy, president of Bangladesh Exporters Association (BEA) proposed for tax waiver on cash incentives, allow duty free import of diesel and furnace oil for export-oriented industries and duty-free import of covered van.

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Shafiul Islam Mohiuddin demanded speedy disposal of export development fund (EDF).

Bangladesh Reconditioned Vehicles Importers and Dealers Association (BARVIDA) president Abdul Mannan Chowdhury Khosru alleged that the prices of new and reconditioned cars were almost same since the new car importers were not showing the actual prices.

Bangladesh Shop Owners Association president Amir Hossain Khan said package VAT should continue to help the small businesses survive.