Proposed budget targets are challenging: FICCI

FICCI - Federation if International Chambers of Commerce and Industry

Dhaka, June 1 --The proposed targets are challenging however if achieved, it will bring momentum to the economy, the Foreign Investors' Chamber of Commerce and Industry (FICCI) said in its reaction to the proposed budget placed by Finance Minister AHM Mustafa Kamal for FY2023-24 in Parliament on Thursday.

The Chamber appreciated the increase in allocation in the power & energy sector. However, allocation for the health, agriculture, and educational sectors does not seem to be adequate. We feel that the Government should concentrate on enhancing the quality of spending, which could bring further efficiency as well as generate employment. It also expresses concern about bridging the deficit from banking sources which may further tighten the liquidity situation.

It appreciated the following proposals, made in the proposed budget:

•Increase of initial threshold for tax-free income by Tk 25,000 to Tk 50,000 for different classes of assesses. However, considering the high inflationary trend, this may not be adequate.

•Introduction of environment surcharge for owning multiple motor cars is a nice initiative for protecting the environment. However, corporations should be excluded as they would need multiple vehicles for its operation.

•The Chamber welcomes the decision to enact a new Income Tax Act 2023 if it includes reformation aligning with vision 2041 of smart Bangladesh. At this stage the Chamber can not comment on the details as it has not been made available in today’s budget session. However, the Chamber expects an English version of the Income Tax Act 2023 will be made available simultaneously for review of the foreign investors.

Apart from the above, Chamber has the following concerns:

•Application of change in the tax rate/amendments with retrospective effect has not been considered to make it prospective.

•In order to enjoy a preferential corporate tax rate of 20% provision of cash transaction limit based on expenditure incurred by a company has not been addressed and floating shares through IPO only has not been amended to include RPO.

•Chamber request for rationalizing the definition of input in line with the global best practice has not been addressed.

•There is no new incentive for local industry development however, government has imposed additional VAT for some local manufacturer e.g. smartphone manufactures, software development and customization, etc.

•Chamber’s proposal for integrated IT strategy, introduction of e-invoicing in line with other developed markets for bringing transparency in revenue collection has not been considered.

•Chamber’s concern on customs duty valuation process in line with the Customs Valuation Rules, 2000 has not been addressed. - UNB