FICCI expresses concerns over provisions in new income tax law

Foreign investors in Bangladesh today expressed concerns over some of the provisions of the proposed income tax law and measures, including increasing the minimum tax on carbonated beverages.

The National Board of Revenue (NBR) wants to slap a 5 per cent tax on gross receipts or turnover of carbonated beverage makers from the next fiscal year from 0.6 per cent now.

"This will result in a price hike of 30 per cent or more," said the Foreign Investors' Chamber of Commerce and Industry (FICCI) at a press conference at the Sheraton Dhaka hotel.

The FICCI said the carbonated beverage industry already faces a customs duty in the range of 5-10 per cent and an indirect tax at 43.75 per cent, including value-added tax and supplementary duty, the highest among South Asian countries.

"This will result in a fall in consumption and reduction in government's tax collection and impact foreign direct investment eventually," said the FICCI, urging the government to cut the tax.

The increase in the minimum tax on carbonated beverages is prohibitive and detrimental to business, said FICCI President Naser Ezaz Bijoy.

"It is not logical to hike the tax rate suddenly."

The chamber also raised concerns over the proposed increase in land transfer tax, saying this will instigate people not to disclose real property prices in formal documents. Instead, they will use the officially fixed land price.

"This will incentivise tax evasion," said Naser, adding that foreign investors who want to do business by complying with rules will also face difficulties because of the spike in the land transfer tax rate.