Efficacy of tax exemptions should be analysed

The effectiveness of the tax exemptions needs to be analysed in order to find their usefulness, said Abu Hena Md Rahmatul Muneem, chairman of the National Board of Revenue (NBR) yesterday.

He was speaking at a pre-budget discussion with the Economic Reporters Forum (ERF) at the NBR premises in the capital's Agargaon.

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His comments came after the ERF called for an assessment of the tax exemptions provided by the government, outlining the benefits they bring to the economy.

"This will help see the rationality of the exemptions and take corrective measures, if necessary," said ERF President Refayet Ullah Mirdha while placing the budget proposals for the fiscal year of 2023-24 on behalf of the country's largest platform for financial journalists.

Muneem said large industries should give space to small ventures in a bid to support the growth of small and medium enterprises in Bangladesh. 

"Large businesses should come with investment in heavy industries and the manufacturing sector while small sectors such as making puffed rice and spice grinding could be left for SMEs."

The Companies Act could be amended to this end, he said.

The ERF said the advance tax refund system has to be strengthened. "If people get refunds quickly it would widen the tax payment tendency among people."

Replying, Muneem said it is a cumbersome process to issue a refund of the taxes once it is deposited to the public exchequer. "The NBR is working to expedite the process."

The ERF suggested raising the tax-free income limit to Tk 5 lakh to provide some relief to people going through a cost-of-living crisis.

It also called for expanding the tax net and ensuring tax compliance through automation instead of raising tax rates since the government would have to generate more revenues to elevate the country's tax-to-GDP ratio by 0.5 percentage points in the next fiscal year and by another 0.5 percentage points and 0.7 percentage points in the following two years.

NBR Member Sams Uddin Ahmed said the tax net is expanding fast and the number of tax return filing might reach 3.5 million thanks to the intensified effort of the tax authority.

The ERF called for beefing up monitoring so that foreigners can't work in Bangladesh illegally after arriving on a tourist visa.

It said bonded warehouse facilities, which have been extended to the garment sector, should be expanded to other export-oriented industries.

Investments aimed at green industrialisation have to be promoted while the wealth surcharge has to be increased from the current level, according to the association.

Abul Kashem, general secretary of the ERF, was present.