Growth target achievable if GDP-investment ratio increases: FICCI

The Foreign Investors’ Chamber of Commerce & Industry (FICCI) has said the GDP growth target of 7.2% in the proposed budget is achievable if GDP-investment ratio increases to the expected level.

The chamber expressed concern for bridging the deficit from banking sources which may tighten the liquidity situation but appreciated notable allocation for health sector, education and key mega projects.

The FICCI highly appreciated the government’s plan to vaccinate 80% of the population in phases against the novel coronavirus.

“From the chamber, we expect this would include all the foreign nationals as well, working for our member companies, who have been relentlessly working and contributing towards the journey of recovery from the unprecedented Covid-19 pandemic,” said the chamber on Friday, reports UNB.

The chamber also noted the government initiative on allowing SMEs’ to access to finance to determine the GDP growth into a positive direction through employment generation, which will result in safeguarding consumers’ spending as well. “This is really commendable.”

The chamber expresses its concern on the following issues:

Continuation of cap on promotional expenses of the company to 0.5% of turnover may increase the effective tax rate from 5% to 15% depending on the size of the company.

No changes have been brought in the VAT Act to reinstate the fundamental principle of the new VAT Act which was part of the original VAT Act in terms of Input definition, automation and simplification of VAT documentation.

change in appeal fee to Commissioner Appeal and to Appellate Tribunal from 10% t0 20%, will ultimately increase the overall deposit up to 50% of the disputed amount, will create huge adverse issue and harassment for the entire industry.

The chamber said it would have been happier, if some of the serious concerns, which it requested to address, were considered in this budget namely:

Withholding tax provision for B2B supply with consideration of a small scale of suppliers and withholding tax rate for non-resident service providers to a reasonable rate.

Withdrawal limit of business promotional expense to relief unjustified extra tax burden.

Withdrawal of minimum tax provision (for Telecom it is 2% of gross receipts, while for Tobacco it is 1%, individuals 0.25% and others 0.6% of gross receipts).

Exemption on withholding tax on interest payable against foreign currency loans/deposits obtained by OBUs from outside Bangladesh.

Withdrawal of existing ceiling on Royalty expenses and Head office expense to promote more conducive business environment for foreign investors.

The chamber appreciated that the proposed budget retains the feature of continuity even during the crisis period.

It also emphasises putting right level of resources and efforts for proper implementation of the budget, which is an area of concern over the years.

The chamber particularly appreciates the following proposals, made in the proposed budget - reduction of corporate tax rate by 2.5% for both listed and non-listed companies; waiver of 5% corporate tax rate in case any company recruits 100 members of the transgender community as part of inclusion in the society, reduction of AT by 1% (from 4% to 3%), reduction of AIT from 3% to 2% for Cement Industry, making payments over Tk. 50 thousand via Banking Channel/MFS.