The Centre for Policy Dialogue has recommended that the National Board of Revenue design the tax measures for the upcoming fiscal year of 2020-2021 considering both the mitigation of urgency and the subsequent economic recovery in the light of the ongoing coronavirus pandemic.
The primary focus of the revenue board should be to strengthen monitoring and enforcement mechanisms to effectively curb tax evasion and illicit financial flows as it would be difficult to raise tax rates and expand the tax net this year, the independent think-tank said in its budget proposals sent to NBR on Sunday.
The CPD also advised the revenue board to revisit its current fiscal incentives with a view to reprioritisation and restructuring keeping impact of the pandemic in mind.
Setting up revenue collection target in a more prudent manner will be critically important for the NBR as the overambitious target setting may lead to a weak macroeconomic management, it said, forecasting that the revenue collection shortfall might reach Tk 1 lakh crore in the current fiscal year of 2019-20.
The CPD also made a number of budget proposals for various affected sectors and individuals.
The NBR may offer a number of benefits including reduction in VAT rate and deferred payment of quarterly advance income tax for manufacturing, travel and tourism sectors.
It may also allow payment of corporate income tax in instalments.
The NBR may allow ‘carry back losses’ for loss-making companies during FY20 against taxable profits for two previous years.
The revenue board may offer waiver of VAT for agro-based industries for several months, defer payment of quarterly advance income tax and offer scope for payment of corporate income tax in instalments.
The government may also provide low-interest credit facility to farmers before the next planting season.
The NBR and the government may consider following ‘go slow’ policy as regards incentivising agri-mechanisation to ease pressure on the rural labour market.
The CPD also recommended increasing the tax-free income limit for individual taxpayers to Tk 3.5 lakh from current Tk 2.5 lakh.
It also proposed that the NBR consider a reduced rate of corporate taxes against earnings during March-June and July-September quarters for pharmaceutical companies, hospitals, clinics, and other health facilities.
It also proposed incentives for doctors, nurses and other support staff working in hospitals with coronavirus-infected patients and related matters.
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