It's been long since we had been following the Income Tax Ordinance 1984 and the most important issue is that the International Monetary Fund (IMF) has imposed a condition at the time of approval of the loan to the government to introduce a new tax act.

The Income Tax Bill 2023 was passed in parliament on Sunday, replacing the Ordinance.

What are the significant changes that may affect businesses?

Financial statement audit by a chartered accountant irrespective of the size of the companies, valuation from a professional valuer on the transfer of shares of no-listed companies, tax on trade licence issue, or renewal based on location will increase the cost of doing business.

The new inclusion is that turnover exceeding Tk 3 crore of partnership firms, associations of persons, funds and long-term agreements shall also submit the audited financial statements following the accounting standards.

In Australia, where this author lives, if the turnover is below AUD 50 million or the number of employees is less than 50, there is no need to obtain audited financial statements. If any of the conditions are met, audited financial statements will have to be required. However, if the lender or director of a company wishes, they may also obtain audited statements.

In Bangladesh, a significant number of companies are incorporated by family members and friends and their turnover or employees is very small. Sometimes, they can't meet their operational expenses during the initial period after incorporation. So, like the cap set for partnership firms, associations of persons and funds, the government may relax the audit binding to relieve the cost of doing business.

Tk 7,000 to Tk 10,000, including tax at Tk 3,000 in Dhaka and Chattogram city corporations, will be required to obtain a trade licence or renew a sole trader business. But in Australia, AUD 39, which is equivalent to about Tk 3,000, is required to obtain a trade licence online.

If anyone wants to get the licence or renewal for three years, the total cost will be AUD 92, or Tk 6,900, meaning about Tk 2,300 annually.

We had been hearing for the last couple of years that a new tax law would be introduced, but finally, it was introduced to fulfil the condition of the IMF.

As the tax law has been changed after a long time, the expectation was high, but it has failed to meet the expectation.

The author is a tax expert and a fellow chartered accountant. He can be reached at jasim.uddin@taxpertbd.com