National Board of Revenue (NBR) Chairman Md Abdur Rahman Khan on Monday said the government has pledged to phase out tax exemptions unless they are deemed absolutely necessary for the country.
“We are going out from the tax exemption culture, we have scrapped existing tax exemptions, we will not give any tax exemption freshly, we have taken a vow, we have prepared a policy that we will not give any tax exemption,” he said.
He made the remarks while addressing a pre-budget meeting at the NBR conference room at the Revenue Building.
Representatives from financial institutions including banks, insurance firms, leasing and merchant banks, the Bangladesh Securities Exchange Commission (BSEC), Dhaka Stock Exchange (DSE), Chittagong Stock Exchange (CSE), and DSE Brokers’ Association, attended the meeting to present their budget proposals.
Expressing dissatisfaction over repeated requests for tax exemptions, the NBR chief questioned the rationale behind seeking such benefits before setting up any entity.
“The first demand is tax holiday, why? This attitude has to be change, otherwise nothing will happen. Every place there is one demand- tax holiday, we do not want to live with this tax exemption culture anymore,” he said.
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He said past tax exemptions have not yielded expected results. “We did not get any positive result wherever we gave this tax exemption,” he added.
He said the government in the past time nurtured the tax exemption culture and currently the country is paying badly for that.
“For that purpose, the tax GDP ratio is not increasing in the country, one analysis said that Bangladesh is losing the same amount of money what it collects as revenue due to the tax exemption, we do not want to bear this bad name anymore,” he said.
Talking about the present condition of the capital market of Bangladesh, Md Abdur Rahman Khan said that the basic problem is the lack of good governance in the capital market.
He mentioned that no country in the world could develop industrialisation without developing the capital market.
“Bangladesh will not be able to do that also, but we have ruined this place through various means, still we are depending on the banking sector for the source of money for industrialisation,” he said.
He blamed the regulators for the lack of confidence of the investors in the capital market.
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He said that business people used to take loans from the banks for setting up their industries but they are not interested to go to the capital market to raise funds.
“Why they are not coming to the capital market, I do not know that,” he added.
He also said that taking money from the banking sector is loan while raising fund from the capital market is “absolutely free money”.
“You do not need to return that money, if you take money from the bank you have to start repaying just after one year, but you will need five years to set up the industry, to reach the break-even point you will need 20 years, them how you will do your business taking money from banks,” he said.