President of Dhaka Chamber of Commerce & Industry (DCCI) Taskeen Ahmed in his initial budget reaction said the proposed budget is not as friendly for businesses and investment expansion as expected by the business community.
“We have seen few positive steps such as controlling inflation, few tax waivers, automated return system, reducing few advance tax, central bonded warehouse, vat waiver to LNG import,” he said. But eventually, he mentioned that it is a mixed budget where businesses will also be in some pressure due to tax burdens.
Regarding tax-free income limit, he said that, this year, the tax-free income limit for the individual has remained almost unchanged, and the move will create an extra tax burden on the taxpayer, especially to those belonging to the middle-income group and service holders.
He said Tk100 crore fund for youth entrepreneurs is a good move. But those who sell their products online will face extra costs, discouraging new startups. On the one hand, internet costs have been slashed, but on the other, VAT on mobile phones will increase which will impede getting required growth in the digitisation process.
Duty on import of spare parts for automobile industries is proposed to increase from 10% to 25% for which Ahmed expressed dissatisfaction. It will hamper the local automotive sector, he added. The revenue collection target fixed will be a big challenge for the government, especially dependency on indirect tax, he opined. He also said that government’s dependency on local banks to mitigate budget deficit will shrink private sector credit flow.
He also said that the increase of turnover tax from 0.6% to 1% will increase the cost of doing business. He proposed that the government reduce the cost of borrowing for businesses, stating that, for growth, this rate should be between 6% to 7%. He also stressed on quality implementation of ADP and austerity in government expenditure.