The newly unveiled budget for Bangladesh’s fiscal year 2024-25 has sparked mixed reactions from the business community.
While the Foreign Investors’ Chamber of Commerce and Industry (FICCI) lauds the government’s efforts towards a comprehensive fiscal plan, the Metropolitan Chamber of Commerce and Industry (MCCI) raises concerns about implementation challenges.
The MCCI highlights the potential for a widening budget deficit due to ongoing tax reforms mandated by the International Monetary Fund (IMF).
These reforms aim to increase the tax-GDP ratio by 0.5%, potentially leading to a heavier burden on existing taxpayers.
The MCCI emphasizes the need to address this issue and calls for a fairer distribution of the tax burden. Concerns regarding rising inflation’s impact on future business expansion were expressed.
Despite the anxieties, a positive note emerged with the government’s decision to reduce the corporate tax rate for unlisted and one-person companies by 2.5%. This move was welcomed by the MCCI as a step towards encouraging business growth.
The FICCI commends the government’s focus on containing inflation and stabilizing the economy. Initiatives like raising interest rates and investing in agricultural and industrial productivity are seen as steps in the right direction.
Additionally, the reduction in corporate tax for unlisted companies is viewed favorably.
However, the FICCI expresses disappointment over the lack of focus on automating tax, VAT, and customs administration. Such automation, they argue, would streamline the process and enhance efficiency.
The absence of these reforms, they fear, could lead to complexities in VAT credit and put financial strain on businesses.
The Institute of Chartered Accountants of Bangladesh (ICAB) welcomes the introduction of several measures, including the prospective rate of tax, reduced tax rates for specific company types, and lower source tax on daily essentials.
They commend the government’s commitment to a significant development budget despite the global challenges.
The new budget walks a tightrope between fostering economic growth and tackling inflation. While the government’s intentions seem positive, challenges in implementation and potential strain on existing taxpayers remain concerns.
As Bangladesh navigates these complexities, the focus should be on creating a fair and efficient tax system that promotes business activity while ensuring long-term economic stability.