Foreign investors yesterday urged the government to reduce corporate tax and formulate a five-year plan for competitive tax rates in context of competing countries to attract investment from abroad.

“We are competing with other countries in getting foreign direct investments and without this we cannot achieve the Sustainable Development Goals. And that's why, we need a plan,” said Shehzad Munim, president of the Foreign Investors' Chamber of Commerce and Industry (FICCI).

The association placed the proposals for consideration at a pre-budget discussion with high-ups of the National Board of Revenue (NBR). 

NBR Chairman Md Mosharraf Hossain Bhuiyan chaired the discussion.

The FICCI said corporate income tax was higher in Bangladesh compared to that in competing countries, mainly Vietnam, Pakistan and Sri Lanka.

Citing examples such as Vietnam's 20 percent, it demanded a 5-10 percent cut in tax rates for companies.

At present, the NBR collects corporate tax in six categories.  Among publicly listed companies, cigarette manufacturers count the highest 47.5 percent and listed companies the lowest 25 percent.

“We are not asking for a radical reduction but we would like to see a plan for the next five years on how we can make our corporate tax quite competitive in context of competing countries,” he said. The trade lobby group also demanded that the NBR reinstate tax rebate benefits for provisioning on bad debts of banks.

In response, the NBR chairman said bank depositors were being “deceived”. “Small borrowers have to repay loans timely. But big defaulters are given rescheduling benefit. We no more want to give tax benefit on this,” he said.

The FICCI also demanded the withdrawal of a provision for a 5 percent tax deduction on provident, gratuity, and superannuation funds. Bhuiyan said the tax rate on pension and provident funds would be rationalised.

The association also called for increasing the minimum threshold of wealth tax surcharge and withdrawal of a provision for paying a certain amount for appeals against tax claims by the tax authority.

“This is a punishment before judgement,” said Abdul Khalek, convener of the Trade, Tariff, Taxation & Company Affairs Subcommittee of FICCI, presenting the proposals.

Bhuiyan said a certain amount of tax can be deposited for appeals at the court as the taxable amounts were high in most cases and the final payable amounts decided by verdicts were usually not zero.

The FICCI also suggested that the NBR incorporate progressive provisions of VAT Act 2012 in VAT Act 1991. In reply, Bhuiyan said they would consider including non-conflicting provisions.

He also said the NBR was working to avoid double taxation and distortion. “We want to ensure that there will be no uneven competition,” he said.'

The FICCI also proposed that the authority should negotiate VAT-related disputes before field offices issue final demand notices.

“If the final demand is issued by the commissioner (the field office head), then we are in the subjudice process and it ends in the court,” he said, urging for the scope to hold dialogues with high-ups of the revenue authority to resolve disputes before the legal process starts. “This could be a way to ease the entire litigation process,” he said.