People will be discouraged to deposit their money with the banks as the government has imposed tax at source on profits and interests.
This will decrease the amount of deposits, which will ultimately lower investment in the country, affecting the country’s overall economy negatively, experts said.
Moreover, it is also not clear to the people whether the government will charge 15 percent tax on all fixed deposit accounts.
Economists opine, the government has imposed tax on deposits as it can be collected easily. What the government should do is to find out the persons who are able to pay tax. This kind of decision is not justified for all citizens, they said.
While placing the Finance Bill in the parliament for passage on June 27, the finance minister made a proposal to deduct 10 percent tax on profit and interests at source for depositors bearing TIN certificates and 15 percent for those who do not have the TIN.
The National Board of Revenue (NBR) has already taken initiative to deduct tax at source as per the provision. The NBR has issued circular to the banks about executing the provision from July 2012, which the banks have started informing their clients through letters.
The finance minister while placing the Finance Bill at the House said, “Those who have more than Tk 100,000 deposit but does not have any tax identifying number (TIN) will have to pay 15 percent tax at source. The clients having TIN will have to pay 10 percent tax.
Earlier in his budget proposal, the finance minister proposed to impose tax on all deposit accounts whatever the deposit amount was. Later, in face of criticism, Prime Minister Sheikh Hasina proposed to impose tax on clients who have at least Tk 100,000 deposit.
HSBC’s retail banking and wealth management chief Md Shafkat Hossain told banglanews24.com: “We are informing our clients about the government decision through letters, e-mails and SMSs. Using all kinds of communication system we have requested our clients to submit their TINs.”
Former Bangladesh Bank Governor Saleh Uddin Ahmed said, “According to my consideration, this kind of tax collection is not right and injustice to general clients.General people will be discouraged to deposit money in the banks. On the other hand, it is contradictory to another section of tax collection that states free income limit as two lakhs.”
The former BB governor observed that the government should reconsider the decision.
Non-government research organisation Centre for Policy Dialogue (CPD) Executive Director Dr Mostafizur Rahman said, “The decision will discourage small investors to keep money in the banks. Those who deposit pension money in the banks will be affected.”
“Due to this decision, those who are not under tax limit will also have to pay tax, creating discrimination among the people.”
The Daily Sun/Bangladesh/ 18th July 2012
The commerce ministry, in a bid to increase the government's non-tax earnings, has proposed doubling of registration and renewal fees for exporters and importers.
In the new policy, the annual import floor has been raised to Tk 5 lakh from Tk 1 lakh.
The registration and renewal fees corresponding to the import floor have been set at Tk 5,000 and Tk 3,000 respectively, from the existing Tk 3,000 and Tk 1,700.
Currently, the most that can be paid as registration and renewal fees are Tk 23,000 and Tk 17,000 respectively, corresponding to annual imports of above Tk 1 crore.
In the proposed policy, they stand at Tk 60,000 and Tk 30,000 respectively, for annual imports of above Tk 5 crore.
If an importer fails to deposit the renewal fee on time, a fine of 100 to 233 percent in excess of the existing fees, have to be paid.
The registration fee for the indenters has been increased by 45 percent to Tk 40,000, while the renewal fee has been raised by 48 percent to Tk 20,000.
For exports, the proposition has been a 100 percent rise in registration and renewal fees, to Tk 7,000 and Tk 5,000 respectively.
On the list of items banned for imports, old computers, old computer accessories, old electronic appliances, all types of industrial sludge and fertiliser and items produced with sludge, have been added.
While import of air gun ammunition will continue to be barred, with the permission from the home ministry, they can be imported for the purpose of sport and shooting clubs.
There has been a proposition to raise the highest value of essential commodities that could be imported through different customs ports.
Now, essentials worth $15,000 can be brought in through the Teknaf customs; raising that to $50,000 has been recommended.
For other land ports, an increase of $3,000 to $10,000 has been suggested.
A provision has been included for export of turbine imported for generation of electricity once it has been used.
Provision has been made for furnishing certificates of the imports of being melamine-free in case of import of food for human consumption.
The Daily Star/Bangladesh/ 15th July 2012
Industries Minister Dilip Barua assured the SME sector that the government has laid due emphasis on removing hassles of getting loans.
He was addressing the inaugural ceremony of ‘Integrated support of poverty and inequality reductions through enterprise development’ (INSPIRED) project at a city hotel Tuesday.
The Industries Ministry has undertaken the project to attain institutional capacity for formulating a SME development strategy in cooperation with European Union (EU).
EU ambassador to Bangladesh William Hanna was present as special guest.
Industries Secretary KH Masud Siddiqui presided over the function.
Dilip Barua mentioned that small and medium enterprises constitute 90 percent of private sector and 70 to 80 percent of non-agricultural workforce.
“It (SME sector) made up to 25 percent of national gross domestic product last year,” he said.
The six-year project will be implemented at the cost of 19 million euro, provided by EU.
Bangladesh bank and the commercial banks’ ability to provide support will be increased by the programme.
The project is also intended to widen the avenues of communication between the bankers and entrepreneurs.
It will make attempts to develop industrial clusters including of agricultural products processing, electronics, plastic goods, light engineering, furniture, textiles and leather.
“This project will enable Bangladesh in the long run sustainable economic growth,” said Dilip Barua.
Focusing on SMEs contribution to national economy, he also expected that the ISPIRED project will expedite the development of SMEs.
ABM Khorshed Alam, additional industries secretary and project director also spoke at the function. A number of small and medium entrepreneurs and senior government officials were also present.
The Daily Sun/Bangladesh/ 12th July 2012
WASHINGTON: Cash remittances sent home by migrants, a major part of developing world revenue, have grown faster than expected despite the world financial crisis, the World Bank said Tuesday.
In an update to its annual report on remittance flows, the development lender said recorded transfers increased by 12.1 per cent last year to $372 billion and are expected to hit $467 billion by 2014.
The report said the growth of remittances had helped developing countries weather the global financial storm but warned that several factors could combine to slow the growth in such transfers in future years.
"Persistent unemployment in Europe and the US is affecting employment prospects of existing migrants and hardening political attitudes toward new immigration," the report said.
"There are risks that if the European crisis deepens, immigration controls in these countries could become even tighter. Volatile exchange rates and uncertainty about the direction of oil prices also present further risks."
The countries receiving the largest sums in remittances from migrants are the developing world's giants India, China and Mexico, but those most reliant on them are more marginal economies.
The Daily Sun/Bangladesh/ 12th July 2012
Finance Minister AMA Muhith, seen among the awardees honoured by the NBR for paying highest VAT, at a function at city’s Bangabandhu International Conference Centre in Dhaka Tuesday.
Finance Minister AMA Muhith Tuesday said the new VAT law in the making will be finalised after discussing with all stakeholders, including the businesspeople.
“We believe in discussions, and so we will discuss with all stakeholders prior to formulation of the VAT law,” Muhith told a function marking the VAT Day 2012.
National Board of Revenue organised the event at city’s Bangabandhu International Conference Centre.
“As soon as the law was tabled at the cabinet meeting, it was said that there was some controversies regarding it,” Muhith said in response to a demand of business leaders for further discussing some aspects of the upcoming law.
AK Azad, President of the Federation of Bangladesh Chamber of Commerce and Industry (FBCCI), in his speech earlier, demanded that the government negotiate with district level businessmen before finalising the law.
The minister said, “I would like to say it (law) is not an old matter for the country. The country got its first VAT law in 1991, while such kinds of law evolved in the whole world in the 60s.”
Citing instances from the developed world where VAT played a key part in bringing transparency in corporate businesses, he said the system also contributed much to improving country’s businesses also.
“A revolution has taken place around the globe in accounts managements because of VAT,” he said, hoping that country’s accounting tasks would significantly be reduced by 2015.
Stressing the importance of the stratified tax collection method, he said the day is not far away when there will be no duties on external trades as the world is heading towards more openness.
In such situation, he said, the country might have to look for other means of tax collection.
The issue of increased tax collection also bears much importance as the next year’s budget will climb to 18.2 per cent GDP, from this year’s 15.5 per cent.
“The more resources the government holds, the more people to get benefits.”
The NBR says despite its limited application the system now constitutes 55 per cent of total tax collection by the internal resources collector.
The Daily Sun/Bangladesh/ 11th July 2012