The National Board of Revenue may introduce a prospective tax method with a projection of tax rates for a reasonably longer term under the planned new law scheduled to come into force from next fiscal year.
Prospective tax measures will facilitate businesses and investors in making long-term and proper business plan and investment. Currently, the tax authority enforces the income tax measures, both for individual and corporate taxpayers, with retrospective effect causing difficulties for investors in making investment plan as the tax rates are frequently changed.
Officials of the NBR said that the new law would provide a long-term projection of tax rates, investment rebate, exemption and other tax measures so that taxpayers could make proper planning on tax, investment and business issues.
The NBR may unveil the draft of the new Income Tax Act by December for stakeholders’ opinion with an aim to place the draft before the parliament for approval before June, 2018 repealing the existing Income Tax Ordinance-1984.
Income tax officials said that the revenue board had already started consultation meetings with the stakeholders including trade bodies to accommodate their recommendations in the draft.
The draft will also focus on international best practices and emerging global taxation issues including money laundering and profit shifting, and reducing corporate tax rates for attracting local and foreign direct investment in the country, they said.
The new law will be mainly in Bengali language with an authentic English version.
The government usually in every year brings various changes in income tax measures including tax rates, thresholds, rate of investment for rebate, exemption and other related issues.
The income tax measures approved in parliament for the current fiscal year become applicable on income of previous fiscal year.
It means that taxpayers do not know what will be the tax rates and other tax measures on income when they earn as the government declares the issues with budget in June, at the end of the year, with retrospective effect.
Taxpayers, experts and businesses often urge the NBR for introducing prospective tax measures and stable tax policy for longer period in the country so that they can devise business plans in advance.
Taxpayers should know about the tax rate, investment rebate and other issues affecting his or her income when income is generated, they say.
Earlier last year, finance minister Abul Maal Abdul Muhith expressed intention to fix the tax-free income limit for a longer period.
The tax-free income limit, tax rates and slabs, corporate tax rates, however, remained almost unchanged for last few years but businesses every year lobby for changes in their favour with a sense of uncertainty.
A high official of the NBR said that the tax measures under the new law would be stable at least for comparatively longer period instead of changing every year.
The country’s existing retrospective tax measures with frequent changes affect investment and business plans of investors, he said.
So, the revenue board has decided to consider the issues and include prospective tax measures in the new law, he added.
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