ICAB praises proposed budget of FY2022-23

The Institute of Chartered Accountants of Bangladesh (ICAB) applauded the proposed budget of FY2022-23 in its instant reaction after the budget was announced.  

Md. Shahadat Hossain FCA, Institute of Chartered Accountants of Bangladesh (ICAB), sent a press release on Thursday (June 9)

The press release said, “We congratulate the incumbent of Bangladesh led by Honorable Prime Minister Sheikh Hasina on the announcement of 15th consecutive budget for the FY 2022-23.”

The total size of budget amounts to Tk 6,78,064 crores which is equivalent to 15.2 percent of GDP. In spite of post pandemic situation, Russia-Ukraine War, and other global uncertainties, government has taken a challenge of implementing development budget of Tk 246,066 crore which is very encouraging step to move forward for a developing country like us.  Additional budget in the infrastructure sector is a commendable step taken by the government, he said.

Expanding the tax net is very much necessary for improving the tax GDP ratio. Government should take further steps to expand the tax net.

The news release added: “We believe that the joint initiative of NBR and ICAB in implementing Document Verification System (DVS) will facilitate to achieve the targeted revenue. We also believe that this initiative will bring about transparency and accountability in financial arena. Tax reform may also contribute for improving tax GDP ratio and increasing revenue collection. Implementation of DVS for increasing collection of government revenue has been appreciated in the budget speech.”

ICAB welcomes the following recommendations in Income Tax Laws:

• Conditional reduction in tax rates for certain types of companies is a good initiative.
• Changing in the rates and areas of withholding taxes is a good initiative as well to facilitate the business activities.
• Introduction of 12% tax rate for all other general industries exporting goods and services and 10% for green industries will encourage diversification of export of goods and services.
• Changing the definitions of amalgamation and research & development, amortization of pre-commencement expenditure and separate provisions for start-up businesses are the business friendly decisions.

We express our concern on the following:

• Disallowed the contributions made to a company's Workers' Profit Participation Fund. This will increase tax burden of the compliant businesses.
• Despite of substantial inflationary pressure, tax free limit of individuals remained unchanged.
• Imposition of capital gain tax from investment in government securities will increase the tax burden of the tax payers.

We appreciate the following changes in the VAT and Supplementary Duty Act:

• Business entity may get central registration if it has 1 or more manufacturing units instead of 2 or more.
• Input tax credit on service for trader.
• In case of VAT deducted at source, decreasing adjustment from 2 tax period to 4 tax period.
• In case of supply of exempted goods and services, imposed penalty instead of revoking the exemption facility when a violation of the conditions takes place.
• Reduction of penalty from 100% to 50% and maximum 100%.
• Charging interest on VAT arrears up to a maximum of 24 months.

We appreciate the following changes in the Customs Act:

• Performing the operation of bonded warehouse electronically.

The ICAB also termed the proposed budget business friendly and will help Bangladesh to upgrade gradually to position itself in the middle income group.