‘Too complicated’: Expert for overhauling new income tax law

The proposed new income tax law needs an overhaul upon private-public dialogue since the law is "too complicated", financial experts said at a programme titled "Discussion on Income Tax Law 2020" in Dhaka Thursday. 

The programme was jointly organised by Business Initiative Leading Development (BUILD) and Economic Reporters Forum (ERF).

Founding Partner of Snehasish Mahmud & Co Snehasish Barua presented the keynote paper in the programme.

He proposed that an authentic English version be published alongside mapping with the IncomeTax Ordinance, 1984. In the proposed law, he said existing benefits for individual taxpayers have been curtailed in terms of investment tax credit specially taxing capital gain on sale of shares of listed companies and bar on purchase of shares and government securities.

Snehasish Barua emphasised clearing the ambiguities surrounding admissible and non-admissible business expenses and rationalising tax deduction at source towards optimising impact of minimum tax.

He said it was proposed to introduce the definition of small and medium enterprise (SME) to promote the sector, based on which new rate will be proposed during the Finance Act. He also pointed out the contradiction in the set-off of business loss with other income.

Snehasish Barua believes introduction of payment of entire salary and limiting payment of raw material through banking channels and also mandatory requirement of E-TIN will impose tax burden on the company.

He said exporters other than garments should also enjoy the existing tax benefit and service providers should also be included in that list.

Speaking on the occasion, ICAB President Mahmud Hasan Khasru said even though the law has been in Bengali, the massive changes will bring troubles. So, the implementation should take time and there should be consultations with the stakeholders.

Abul Kashem Khan, chairperson of BUILD and former president of Dhaka chamber, said, "Our tax collection base is weak. Regular taxpayers are under pressure as limited people pay taxes. We must get out of this culture."

Mentioning that traders get their capital stuck in advance income taxes, he said even if a company does not have taxable income, tax is deducted at source. Although it is adjusted later on, the business loss is irreparable.

Policy Exchange Chairman Masrur Reaz said the tax policy should be digitised, which is missing in the new law.

"We are lagging behind in business because of taxes," he commented, citing tax compliance examples of neighbouring India and Vietnam.

Dhaka chamber President Rizwan Rahman said businessmen need freedom. If there is no exception in the capital market, it will not turn around. The new law does not have these issues.

He proposed tax concessions to research and development of private sector companies. Rizwan Rahman also proposed to change the system of audit assessment.

Noting that more time is needed before the law can be implemented, he said it is not possible to change the 100-year-old law in a few days. It will take a long time to negotiate with the stakeholders.

Shahidul Islam, first secretary of the national revenue board, said only 3% of taxpayers' returns are audited.

"It is true that the law is 100-year-old. However, the law gets updated regularly, and amended in the form of a finance bill in parliament every year," he noted.

He said the new law in Bengali was directed to be enacted by the parliament in 2020 as the revenue board worked for two years on it.

"The law was to be tabled in the cabinet by 30 November, but we pushed it back. We bought the time to discuss with the stakeholders. It is important to be aware that the law does not get stuck as a result of the delay," he added.

Speaking as the chief guest on the occasion, Economic Affairs Adviser to the Prime Minister Mashiur Rahman said coordination is needed among parties who will make the law, who will implement it and who will abide by it.

"Before enacting the law, it has to be assessed whether it is efficient to fetch more revenue. At the same time, it has to be maintained that the law does not appear as a burden to the people. So, the law needs to be more specific," he noted.

ERF Secretary S M Rashidul Hasan moderated the programme.

Former Bangladesh Securities and Exchange Commission commissioner Swapan Kumar Bala, vehicle importers' association President Abdul Haq, President of International Business Forum Bangladesh Humayun Rashid, metropolitan chamber board member Hasan Mahmud also spoke on the occasion.