ICAB welcomes budget for reduction and changes in taxes, customs

The Institute of Chartered Accountants of Bangladesh (ICAB) welcomed the budget for the FY 2021-22 for the reduction of corporate tax rate, tax exemption from automobile, home appliance, light engineering along with tax incentive for employment of transgenders.

They also showered praises on the government for their timely budget which exempted women SME entrepreneurs from tax, 10-year tax exemption for upskill training and development.

"We appreciate that the proposed budget has focused on employment generation through skill development, exemption in light engineering, exemption of agro-based industry and bringing the new concept Made in Bangladesh," said Mahmudul Hasan Khusru, president of ICAB.

The total size of the budget amounts to Tk 6,03,681 crores which is equivalent to 17.5 percent of the gross domestic product (GDP).

This year the budget has been proposed to increase by 12 percent over the revised budget of last year. And the development budget has been increased by 13.96 percent as compared to last year.

Targeted revenue of Tk 3,89,000 crore appears to be difficult to be realised due to the negative impacts of continued pandemic on the economy. Having set the GDP growth target at 7.2 percent is appreciable, however, it seems to be challenging to achieve.

"We believe that the joint initiative of NBR and ICAB in implementing Document Verification System (DVS) will facilitate the achievement of the targeted revenue," the ICAB president said.

"More budgetary allocation is expected in Education, Research and Development and Automation in tax administration. Budget allocation for social safety nets seems to be inadequate considering the substantial number of people falling below the poverty level due to ongoing Covid-19," he added.

"We appreciate changes in VAT and Supplementary duty laws and customs laws: (1) Service rendered from Bangladesh to outside the country will be considered as export for application of VAT at zero rate; (2) In case of international tender, supply to local winner of tender through LC opened in foreign currency shall be considered as deemed export, earlier which was applicable only to the foreign companies; (3) Advance Tax has been proposed to reduce from 4 per cent to 3 per cent in case of import of raw materials which will help manufacturing industry,"

"(4) Existing 200 per cent fine has been reduced to 100 per cent. However, this may further be reduced for easing the life of bonafide tax payer; (5) Monthly 2 per cent rate of interest charge on arrear VAT has been proposed to reduce at 1 per cent; (6) Mandatory submission of Annual Financial Statements by limited companies for the purpose of VAT audit has been proposed; (7) Provisions regarding deemed export and backward linkage industries has been inserted."

"Bangladesh Customs water existing 12 nautical miles have been extended to 24 nautical miles and Chartered accountants will be eligible to appear before the customs officer/appellate authority as authorized representative."