Prime minister’s private industry and investment affairs adviser Salman F Rahman on Monday said that the government was seriously working on the issue of proposed 15 per cent additional tax on retained earnings and reserve of listed companies and the issue might be resolved before passage of the budget for the financial year of 2019-20.
‘We are seriously working on the issue as the imposition of 15 per cent tax on retained earnings is actually double taxation. We are looking into it,’ he said at a press conference on the World Investment Report 2019, organised by the Bangladesh Investment Development Authority at the Sonargaon Hotel in capital Dhaka.
Finance minister AHM Mustafa Kamal in the proposed budget that was placed before parliament on June 13 imposed the tax on retained earnings and reserve of listed companies.
The budget is likely to be passed in parliament on June 30.
Country’s businesspeople expressed their concerns that the imposition of tax would put a negative impact on investment as the companies make their reinvestments with retained earnings.
Citing UNCTAD’s World Investment Report-2019, Salman said that although the global foreign direct investment inflow was negative in 2018, Bangladesh registered a significant growth in the area in the year and it was a positive sign for the country’s economy.
He said that the government was working to improve the ease of doing business situation and the country would get a better place in the ranking to be announced in October.
‘We have targeted to bring down the ease of doing business rank for Bangladesh to double digit from existing 176 within 12 months and below 50 within 24 months,’ Salman said.
According to the World Investment Report 2019, Bangladesh’s foreign direct investment in 2018 reached $3.61 billion with a 67.94-per cent growth from $2.15 billion in 2017 due mainly to acquisition of a local tobacco company by a Japanese company.
Last year, Japan Tobacco had completed the acquisition of the business of Dhaka Tobacco with an investment worth $1.47 billion and the amount was the biggest single FDI in the history Bangladesh.
Out of $3.61 billion in net FDI inflow, equity capital was $1.12 billion, reinvested earnings $1.30 billion and intra-company loans $1.18 billion, according to the report presented by Policy Research institute executive director Ahsan H Mansur at the press conference.
Among the other South Asian countries, India in 2018 received FDI worth $42.29 billion, up 6 per cent on the previous year, Nepal received $160.8 million with 24 per cent growth and Sri Lanka got $1.61billion with 17 per cent growth.
The report showed that Pakistan’s FDI declined by 27 per cent to $2.35 billion in 2018 and Bhutan’s FDI inflow also dropped by 160 per cent to $5.9 million in the year.
Mansur said that FDI in Bangladesh accounted for only 6.4 per cent of the total South Asia’s FDI inflows while the major recipient India received 77 per cent of the total FDI inflows in the region.
BIDA chairman Kazi Aminul Islam said that the global flows of FDI registered 13 per cent negative growth to $1.3 trillion in last year but Bangladesh registered nearly 68 per cent growth in FDI in the year.
He said that Bangladesh became a country with immense potentials for the foreign investors.
Prime Minister’s Office SDG affairs principal coordinator M Abul Kalam Azad, Bangladesh Economic Zones Authority executive chairman Paban Chowdhury and Federation of Bangladesh Chambers of Commerce and Industry president Sheikh Fazle Fahim were also present at the programme.
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