Chairman of the National Board of Revenue (NBR) Md Abdur Rahman on Tuesday said the widespread use of tax exemptions is limiting the country’s ability to raise its tax-to-GDP ratio.
“We offer tax holidays to local and foreign companies to boost employment… Although the waiver is meant for eight years, it often extends up to 40,” he said while speaking at a seminar titled ‘Corporate Tax and VAT Reform: A Critical Perspective for the NBR’.
Centre for Policy Dialogue (CPD), a think tank, organised the event at a city hotel.
The NBR chief warned that the failure to collect adequate taxes could affect development and spending of the government in different sectors.
Abdur Rahman said that tax and VAT returns will be easily available if everything goes digital.
Business leaders, however, expressed dissatisfaction over the current tax rates.
A survey report conducted by CPD said most businesspeople in the country feel that the current tax rate is unfair and has become a major obstacle to the development of their businesses. “Eighty-two percent of the businesspeople surveyed consider the current tax rate unfair,” the report says.
CPD conducted the survey in collaboration with Christian Aid (CA).
According to its findings, 79 percent of the businesspeople who participated in the study cited lack of accountability of tax officials as a major problem, while 72 percent said that corruption in tax administration is the main obstacle for them.
Another NBR official suspended
Besides, the lack of a fully digital tax filing system has also emerged as a major challenge for businessmen.
The survey, conducted on 123 organizations located in Dhaka and Chittagong, also found that 65 percent of businessmen regularly get into disputes with tax officials over tax demands.
Many businesspeople complained that tax officials sometimes impose taxes arbitrarily without proper explanation or foresight.
According to them, these practices create invisible pressure beyond the tax amount, which is more detrimental to businesses.
The report found that 73.5 percent of participating businesspeople identified the complexity of VAT rates as their main obstacle.