Experts and entrepreneurs on Sunday suggested that the government should continue the tax holiday scheme to attract investment and promote employment generation in the country.
At a pre-budget dialogue on revisiting tax holiday policy for promoting investment and export, they also emphasised revisiting the existing scheme as it failed to attract investment and create jobs to an expected level due mainly to limitation in sector selection, nature of the scheme and cumbersome procedures and mistrust between policymakers and investors.
NBR should conduct cost-benefit analysis and prioritise the sectors eligible for the tax exemption facility, they said.
Bangladesh Investment Development Authority and Business Initiative Leading Development jointly organised the dialogue at BIDA headquarters in Dhaka.
BUILD chief executive officer Ferdaus Ara Begum presented a study paper on tax holiday in Bangladesh at the dialogue.
‘The growth rate of investment and employment generation in the sectors enjoying tax holiday is very insignificant,’ she said, referring to the study results.
A total of 408 domestic industries enjoyed the benefits up to the fiscal year of 2017-18 from FY 1973-1974 and created employment only for 29,000 people with attracting investments worth around Tk 600 crore, she said.
The revenue losses of NBR are also very insignificant, which stood at 0.13 per cent of the total revenue collection in FY16, the study found.
A total of 464 industrial units at export processing zones, however, created employment for 67,629 people and contributed $6.55 billion to the country’s exports, it added.
Ferdaus Ara said that the government should extend the tax holiday scheme as for most cases the scheme was set to expire June, 2019.
Tax holiday benefit should be offered to all industries except economically, socially and environmentally hazardous industries, she added.
BIDA executive chairman Kazi Aminul Islam said that NBR should revisit the tax holiday scheme as it could not put a significant impact on the situation of investment and job creation.
The overall conditions are cumbersome, he said.
There is also policy failure as success of the readymade garment sector could not be transferred to other sectors, he said.
Former Institute of Chartered Accountants of Bangladesh president Mohammad Humayun Kabir said that the government should set priorities before providing the benefits.
It would not bring any positive result if the benefits are given on ad hoc basis to some sectors due to individuals’ influences, he said.
Former NBR member (income tax policy) Syed Aminul Karim said that NBR should conduct a cost-benefit analysis to find out the impact of the scheme on investment and employment generation.
The scheme must be continued to increase investment and facilitate employment, he said, adding that measures would also have to be taken to prevent misuse of the benefits.
Former Dhaka Chamber of Commerce and Industry president Abul Kasem Khan also recommended continuation of the tax holiday facility saying that tax benefits to a sector created cascading effects to some other sectors.
NBR member (income tax policy) Kanon Kumar Roy said that almost all sectors in various forms got the facility.
NBR revisits the scheme every year taking the overall situation of the country into consideration, he said.
He said that the effective corporate tax rate stood only slightly over 3 per cent whereas the corporate tax rate was 35 per cent mainly due to widespread tax holiday and tax exemption.
Former DCCI senior vice-president Humayun Rashid, International Finance Corporation private sector specialist Hosna Ferdous Sumi, Nestle Bangladesh company secretary Debabrata Roy Chowdhury spoke, among others, at the programme.
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