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Slash corporate taxes to attract foreign investors: Foreign Chamber

ficci-logo-217x273Foreign investors operating in Bangladesh yesterday ( 12 March 2015)  called for a cut in corporate and other taxes to align them with the rates in competitor countries and attract investment from overseas.

Rupali Chowdhury, president of Foreign Investors’ Chamber of Commerce and Industry (FICCI), said India has cut corporate taxes from 30 percent to 25 percent in its latest budget for over four years, to attract inward investment and match the country’s rate with those in Southeast Asian nations.

“This is in contrast to our current corporate tax rate of 35 percent, which was 37.5 percent last fiscal year,” she said at the chamber’s monthly meeting at Sonargaon Hotel in Dhaka.

In the case of the super rich tax at 2 percent in India, Bangladesh has an effective 8 percent; the value added tax is at 15 percent and supplementary duty at 5 percent to 20 percent on locally manufactured goods, compared to 11-13 percent excise and sales taxes in the neighbouring country, she said.

With these rates, companies would not be able to compete, said Chowdhury, also managing director of Berger Paints Bangladesh.

She said the new VAT Act is good, but there is a need to sort out some differences between National Board of Revenue and the businesses.

“For the next fiscal year, our recommendation is to look into the possibility of increasing the tax net in the budget, instead of creating a burden on existing taxpayers.”

The tax collection system needs to be made simple, fair and more efficient, comprehensive and transparent, Chowdhury said. “For tax related issues, FICCI would like to contribute to policy formulation.”

Kevin Lyon, vice president of FICCI and president of Chevron Bangladesh, the largest foreign investor in the country, said stable fiscal and tax policies are needed to help foreign investors play a role in maintaining the current GDP growth and even achieving higher growth.

Formed in 1963, the chamber represents 184 foreign companies operating in the manufacturing, trading and financial institutions categories.

Foreign investors contribute 30 percent to the country’s total revenue income, Finance Minister AMA Muhith said at the event. “So, foreign investors are very important for Bangladesh.”

He said exports might be hampered due to the ongoing slowdown in the global economy. So, the government will give the highest attention to boost domestic demand such that the export-oriented industries survive, he added.

However, Bangladesh would continue to be a leading apparel producing country because of its strength in value addition, the minister added.

Muhith also praised Prof Muhammad Yunus, saying the Nobel laureate’s idea of giving collateral-free loans to rural borrowers reduced poverty, empowered women and transformed the economy.

Raihan Shamsi, chief executive officer of Accenture Bangladesh, said awareness among public officials about the country’s immense potential in outsourcing business has to be raised so they look at the industry in the same spirit as the government does.

Report: Daily Star

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