Tax exemption soars by over 20pc

Al Amin :
Tax exemptions on import stages have increased by 20.35 per cent in July-May period of the outgoing fiscal year, despite the advice of the International Monetary Fund (IMF) for rationalizing tax exemption.

The National Board of Revenue (NBR) has exempted taxes on the imported goods worth Tk 56,466 crore by issuing different circulars and office orders in the 11 months period. The amount was Tk 46,916 crore in the same period of last year, according to the data of the NBR.

As a result, the tax exemption increased by Tk 9,550 crore or 20.35 per cent compared to the same period of last fiscal year, the NBR data showed.
Of the exempted taxes, Tk 8,901 crore has been given for importing capital machineries, Tk 8,198 crore for special exemption, Tk 3,828 crore for edible oil imports, Tk 893 crore for poultry farms and Tk 5,438 crore for importing defensive weapons during the eleven-month period.
Due to the increase in tax exemption, the revenue collection deficit is likely to stand at a record high in the outgoing fiscal year (2022-23), the NBR officials apprehended.

They said tax-GDP reduces around 2.28 per cent per year due to low tax rate, tax exemption and the withdrawal of taxes in several sectors and if the facilities are withdrawn, the country’s tax-GDP ratio will stand at 10.8 per cent.
NBR officials said tax exemption has increased in the outgoing fiscal year for protecting local export-oriented companies, manufacturing industries, power grid companies, poultry farms and to bring the prices of essential commodities like edible oil and rice under the purchasing power of consumers.
Besides, political decision was taken into consideration for many of the cases for exempting taxes, they added. Withdrawal of tax exemption completely is not possible at the moment as it may impact on local industries and markets heavily, the officials said.
The IMF has advised for reducing tax exemption as the tendency of tax exemption is high in Bangladesh compared to other countries.
The government also made a commitment of adopting tax revenue measures that are likely to yield an additional 0.5 per cent to 0.7 per cent of GDP annually under the IMF $4.7-billion loan programme over the three years.

Dr Ahsan H Mansur, Executive Director of the Policy Research Institute (PRI), told The New Nation, “NBR has to rationalize tax exemptions but there is no scope of withdrawing as it is given, some cases, to save foreign exchange, sustain economic growth-like back-to-back L/C facilities, education and health and to ensure relief as per the international conventions.”

NBR can withdraw tax exemption from the ongoing mega project to increase revenue earnings, he added.