Why are entrepreneurs demanding Zero Tax at least for the first five years? Do you have this question in your mind? Let’s look at the matter in a little more detail about zero tax for startups in Bangladesh. To encourage local and foreign investment in Bangladesh, Bangladeshi business leaders have emphasized the need for tax reforms on June 8, 2021, during a virtual post-budget dialogue hosted by the Chamber of Commerce and Industry (CCI).
In the proposed fiscal year 2021-22, Md. Jashim Uddin, president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), praised the Government for lowering corporate Tax and offering VAT waivers tax holiday. But, given that the ongoing coronavirus pandemic has harmed all firms, he requested that Advance Income Tax (AIT) and Advance Trade VAT (ATV) be repealed entirely, claiming that they raise the cost of doing business while providing little to no value to the Government.
Mr. Jasim added that it’s challenging to obtain the AIT back from the National Board of Revenue (NBR) once it’s been paid. President Alam of the Chittagong Chamber of Commerce & Industry (CCCI) emphasized the importance of expanding the tax net while lowering the tax rate for existing taxpayers.
According to Faruque Hassan, President, Bangladesh Garments Manufacturers and Exporters Association (BGMEA), any new tax or policy should last the first five years. The idea in the new budget to keep giving a 1% additional cash incentive for the garments industry would help the sector increase cash flow. If the COVID-19 situation does not worsen, Hassan believes Bangladesh’s exports will quickly revert to pre-pandemic levels.
The Bangladesh Cement Manufacturers Association (BCMA), Alamgir Kabir, has urged that non-adjustable AIT for cement companies be completely phased out. Although the AIT has been decreased from 3% to 2% in the proposed budget, it is still a hardship for the import-dependent sector, he stated.
Furthermore, he said, Tk 500 must be paid as import duty per tonne of clinker, the significant raw material of cement, resulting in average import duty of 10 to 11%, making it impossible for the highly competitive sector to thrive. Asif Ibrahim, Chairman of the Chittagong Stock Exchange, praised the plan in the 2019 budget to cut corporation tax and suggested that the tax gap between listed and non-listed firms be increased, so those good companies are encouraged to come to the capital market.
Read: Countries Who Announced 0-Tax or Tax-friendly & Their Success