National Board of Revenue chairman Md Mosharraf Hossain Bhuiyan on Tuesday said that they would find an amicable solution to the issue of proposed 15 per cent tax on retained earnings and reserve of the publicly listed companies.
He made the commitment after the foreign investors raised their concerns over the proposed fiscal measure and demanded a review of the measure claiming that it would affect expansion of business by the multinational companies.
The proposed tax, if becomes effective, would also facilitate draining out of money in the form of dividend from the country as most of the investors of MNCs stay abroad, the foreign investors said at a luncheon meeting organised by the Foreign Investors’ Chamber of Commerce and Industry at the Hotel Westin in Dhaka.
Mosharraf said that the measure along with two others was taken to give some reliefs to investors.
‘Definitely, we will look into it and sit together to find an amicable solution,’ he assured the foreign investors.
‘Actually, the share market of Bangladesh is volatile, it is called Fatka Bazar in Bangla,’ he said.
The share market in the country is not in a good position as many of the actors are not educated and familiar with business and investment of the country, he said.
So, sometimes they (investors in the capital market) find them in a very bad position, he said.
The NBR chairman advised the foreign investors to sit with the NBR before June 23 to discuss the related issues.
He also assured that they would consider the demands for withdrawal of value-added tax on e-commerce, reduction in minimum tax on mobile telephone operators and some other issues before the proposed budget was passed in parliament.
He also said that the NBR imposed VAT on e-commerce to avoid difference between similar businesses including superstores as businesspeople from the sectors also demanded VAT-free facility if e-commerce was kept VAT-free.
Mosharraf also argued in favour of tax hike on sugar and edible oil.
The price of sugar will rise by Tk 5 a kilogram, which will not affect consumers as the price of the sweetener remains lower compared with other essential products including vegetables, he said.
As per estimation of NBR, the price of edible oil will also rise by Tk 3 to Tk 5 a kg due to imposition of VAT and the price hike is also tolerable, he said.
FICCI president Shehzad Munim said that the measures related to imposition of 15 per cent tax on retained earnings and reserve, and on stock dividend needed a review.
Almost 36 per cent to 40 per cent of Bangladesh’s foreign direct investment comes from retained earnings of MNCs operating in the country, he said.
MNCs retain a significant amount of their earnings to invest for further growth, he added.
If MNCs give all the money as dividend, most of the money will go out of the country as most of the investors stay abroad, he added.
He also demanded reconsideration of some other tax measures including increase in minimum tax on mobile operators.
VAT at 7.5 per cent on e-commerce would also jeopardise the growth of the sector, he said.
Mobile operator Robi chief executive officer Mahtab Uddin Ahmed said that the proposed increase in minimum tax on the telecom sector to 2 per cent from 0.75 per cent was discriminatory for the sector in terms of foreign investment protection act.
Currently, only Grameenphone is making profits.
Other operators will have to pay the tax from their capital as they don’t make profits, he said requesting NBR to withdraw the tax. Otherwise, the operators would not be able to survive, he said.
In response, Mosharraf said that all companies should make profits.
Bangladesh Association of Software and Information Services president Syed Almas Kabir demanded VAT exemption for e-commerce for the next five years.
FICCI vice-president Francois de Maricourt, executive director Jamil Osman and other FICCI members were present in the meeting.
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