Al Amin :
The government is saving around Tk10,000 crore as it has backtracked from giving tax exemptions to some sectors, which NBR officials and experts call unnecessary.
According to data from the National Board of Revenue (NBR), the revenue exemption declined by 23.48 percent, or Tk 9,854 crore, year-over-year in the first eight months (July–February) of the current fiscal year.
The revenue exemptions in different sectors have been reduced to Tk 32,115 crore from Tk 41,970 crore in the same period of the last fiscal year, the data showed.
The revenue board has withdrawn the exemption as per the commitment with the International Monetary Fund (IMF) for receiving loans from the lending firm.
The IMF has called for reducing tax exemptions in all three sectors: income tax, value-added tax (VAT), and customs for disbursement of loans.
The tendency towards tax exemption is high in Bangladesh as compared to other countries, which hinders Bangladesh from collecting the desired revenue, according to the IMF.
Earlier, the IMF had asked for a list of the sectors with tax exemptions. At the same time, it has recommended reviewing the sectors that could be excluded from the list.
The NBR officials informed the lending agency that they have to provide this facility in several sectors for the growth of local industries, and different countries in the world also provide this facility.
However, the tax exemption facility is being reduced gradually, the NBR officials informed the IMF.
NBR officials said many dishonest businesses had taken advantage of the exemptions, which were given without any scrutiny, and the government is losing a huge amount of revenue.
Following this, the NBR is withdrawing the revenue exemption facilities from the sectors that are not directly involved with consumers, they added.
Besides, due to the withdrawal of exemption, over Tk 20,000 crore will be entered into the government fund as tax revenue, which can be spent in different development sectors of the country, the NBR officials said.
Dr. Zahid Hussain, former lead economist of the World Bank Dhaka office, told The New Nation, “Many Statutory Regulatory Orders (SROs) for giving exemption have been issued unnecessarily, as well as any proper study on impact. Such a kind of exemption should be withdrawn.”
“But if the tax authority withdraws the exemption randomly, consumers’ suffering will increase,” he added.
According to a study conducted by the NBR, around Tk 60,000 crore in revenues have been exempted in different sectors per year.
Tax exemptions have long been described as too high in Bangladesh, and experts said these privileges have been misused on many occasions, ultimately resulting in tax evasion.
Moreover, as the exemption list is not always readily available in Bangladesh, there is scope for speculation on the avenues and extents of the offered concessions.
“We have to evaluate our exemption size based on the revenue we generate. Considering that, exemptions are too high,” said former NBR chairman Muhammad Abdul Mazid.
Tax exemptions are normally awarded to deserving parties, but when they are given to undeserving candidates, the deserving groups are often denied their fair share.
For instance, products imported in the name of megaprojects are exempt from duties. Project consultants are also exempt from tax.
“This practice completely destroys discipline,” Mazid said.