13 July 2024

MCCI applauds decision to reduce corporate tax rate by 2.5pc

Business Eye Report

Published: 23:07, 7 June 2024

MCCI applauds decision to reduce corporate tax rate by 2.5pc

The Metropolitan Chamber of Commerce and Industry (MCCI) has applauded the government for the proposal in the new budget to reduce the corporate tax rate by 2.5 percent for unlisted companies and one-person companies.

Finance Minister Abul Hassan Mahmood Ali placed Taka 7.97 lakh crore national budget for the financial year 2024-25 (FY25) at the Jatiya Sangsad on Thursday.

In the budget speech, Ali proposed the 25 percent corporate tax to replace the existing 27.5 percent for non-listed companies.

In an initial reaction on the proposed budget, MCCI proposed decreasing this rate for other listed companies as well.

Considering the present economic landscape, the chamber mentioned, the National Board of Revenue (NBR) has increased the revenue collection goal by 11.63 percent.

It said the world is witnessing a persistent surge in commodity prices and inflation. On the other hand, the government faces a formidable challenge in expanding the tax net and increasing the tax-GDP ratio, it added.

MCCI believed that ensuring adequate supply of Electronic Fiscal Devices (EFDs) for VAT will speed up the overall VAT collection process.

Furthermore, it suggested the prompt automation of the entire VAT system and the sufficient availability of EFDs.

In the current context, the chamber observed that it is necessary to increase the VAT net and bring all eligible establishments under the umbrella of VAT.

MCCI appreciated the proposed provision of 10 percent instead of 20 percent deposit of tax claimed in appeals before the Appellate Commissionerate and the Appellate Tribunal in light of Value Added Tax and Supplementary Duty Act, 2012 and Value Added Tax and Supplementary Duty Rules, 2016.

The chamber opined that the effective automation of the VAT system, specifically through the integration of the Integrated VAT Administration System (IVAS) and Application Programming Interface (API), will significantly improve its efficiency.

This will help ensure more VAT collection and bring more establishments under VAT, it added.

MCCI praised the government for extending the tax exemption on Information Technology Enabled Services (ITES) till June 30, 2027.

Based on the latest data, it mentioned that the annual domestic turnover in the ITES sector is estimated to be approximately US$ 1.5 billion, with exports reaching around $1.9 billion.

The current investment in this sector stands at approximately $600 billion, it added.

MCCI, in alignment with climate change goals, welcomed the proposal to reduce tariffs on electric and hybrid vehicles.

MCCI expressed gratitude to all parties involved in the enactment of the new Customs Act, 2023, in Bangla language, as a measure to facilitate ease of doing business.

Bangladesh’s import-dependent economy will experience improved trade conditions through the implementation of the Customs Act, 2023, it added.

MCCI believed that this Act has the potential to enhance the ease of doing business, while also ensuring compliance with WTO obligations and fostering a favorable environment for businesses.

The MCCI acknowledged the National Budget Proposal’s focus on “Cashless Bangladesh,” “Digital Bank and Credit Scoring System,” and