Tax gap between listed, non-listed cos should be 10.0%, BSEC tells fin min
The Bangladesh Securities and Exchange Commission has proposed that the finance ministry should increase tax gap between the listed and non-listed companies to 10% points for encouraging more companies to enlist with the country’s two bourses and to allow listed companies to issue better dividend. The capital market regulator made the proposals for the fiscal year 2016-17, BSEC officials said. Presently, banks and non-banking financial institutions listed with Dhaka and Chittagong stock exchanges pay 37.5% tax while non-listed banks and non-bank financial institutions pay 40% corporate tax. The only listed mobile phone operator, Grameenphone, pays 40% corporate tax while regular corporate tax for non-listed mobile phone operators remains at 45% in the fiscal year 2015-16. Other listed industrial companies enjoy 10% tax incentive for enlistment with the capital market. Besides, capital gain tax on long-term holding of securities for two years by institutional investors should be reduced to 5% instead of existing 10% for one year holding of securities, the BSEC proposal said. At present, there is no capital gain tax on retail investors’ profit.
Digital dividends still far off
The ICT sector accounts for less than 0.5% of total jobs in Bangladesh even though digital technologies have spread rapidly in recent years, according to a new World Bank report. The rate is close to 1% in India and Nigeria and 0.5% in Kenya, said the World Development Report 2016: Digital Dividends. The government has taken a series of steps to transform the country into Digital Bangladesh, but it is still lagging in reaping the benefits of faster internet and penetration of mobile phones. With around 130 million mobile phone subscribers, the digital technologies are taking hold in Bangladesh. Yet, the country has the fifth largest population not connected to the internet. “Bangladesh can accelerate growth, create more jobs and deliver better public services by enhancing access to digital technologies,” the WB said. Zunaid Ahmed Palak, state minister for information and communication technology, and Qimiao Fan, country director of the WB for Bangladesh, Bhutan and Nepal, jointly launched the report at the Amari hotel in Dhaka yesterday. In Bangladesh, mobile banking has broadened financial inclusion for the poor. Further, the government has rolled out electronic government procurement or e-GP.
Government eyes USD 5.2 billion for development, deficit financing
The government has set a target of taking USD 5.2 billion in concessional assistance from foreign financiers in the upcoming fiscal for bankrolling country’s hefty development recipe and budget deficit. Officials said Monday the target in the next financial year (FY), 2016-17, is 19% up from the USD 4.4 billion medium and long-term (MLT) foreign loans and grants targeted in the current FY2015-16. The targeted higher external borrowing is necessitated for a substantially raised budget outlay. The government is likely to present a BDT 3.4 trillion (USD42.5 billion) national budget for the next fiscal. And revenue-earning target may be proposed at BDT 2.3 trillion (USD28.8 billion). The Economic Relations Division (ERD) has already prepared the aid target for the upcoming budget and sent it to the Ministry of Finance (MoF) which is preparing the budget for FY2017, she said. Different development partners, including the World Bank (WB), the Asian Development Bank (ADB), Japan, and the Islamic Development Bank, provide MLT loans and grants for executing the country’s development works.
World Bank to help prepare codes for microfinance sector
An extensive code of conduct (CoC) is in the pipeline for over 25.11 million clients of the microfinance institutions (MFIs) with an aim to make them more aware, responsible and ethical, officials said. Recently, the World Bank (WB) has proposed to finance USD0.5 million for preparing the project. Implementation period of the project will be two years. The Microcredit Regulatory Authority (MRA) has agreed to the proposal of the international lender. The MRA has sent the WB proposal to the ministry of finance seeking its approval. The CoC will act as a guideline for the regulator. Preparing a CoC for the country’s MFI clients is urgently needed to keep adjustments with the existing act and regulations. There is no overall code of conduct for the MFI clients although some related sections have been put separately in the existing MRA act and regulations. Acceptability and scoring of the regulator will be enhanced in the international arena. It will be possible to collect necessary documents in this connection shortly if the guideline is implemented. Besides, it will be helpful to protect the interest of all clients of the country’s MFIs.
Only half of ADP money spent in 10 months
The implementation of the annual development program in the first ten months of the current fiscal year was only half the revised allocation, mainly due to low spending on the Padma bridge project. According to the Implementation Monitoring and Evaluation Division, BDT 451.1 billion was utilized from the allocation in July-April, which is about 50% of the revised allocation of BDT 910.0 billion for the year. The original ADP allocation last year was BDT 970.0 billion; it was later revised down for the lack of ability to implement it. Of the 10 large ministries and divisions, the Bridges Division spent only 41% of its revised allocation in 10 months. The number of projects under the bridges division is only 3, of which, the Padma bridge project received the highest allocation. In the first nine months of the fiscal year, BDT 8.9 billion has been utilized in the project. The Bridges Division got an allocation of BDT 74.0 billion in the current fiscal year. The total estimated cost of the bridge is BDT 287.9 billion. However, the allocation was slashed in the revised budget and proposed at BDT 50.1 billion. Besides the Bridges Division, many other big ministries and divisions have been slow in terms of spending. The Road Transport and Highways Division spent 52% of its revised allocation in the first 10 months, health ministry 38%, railways 46%, education 48%, water resource 44%, primary and mass education 55%, and energy division 55%.
Impacts of new VAT law: Fear flies higher about business fall, price rises
A private-sector coalition expressed its concern Monday over possible fallout of a new VAT law that it anticipates may cause sharp rise in cost of doing business and trigger hike in prices at the consumers’ level. In its reaction over the government move to enforce the law, the coalition, BUILD, aired the fear that it might affect the private sector in general and Small and Medium Enterprises (SMEs) in particular. The non-governmental organization requested an acceptable solution regarding the implementation of the Value Added Tax (VAT) and Supplementary Duty Act 2012. The National Board of Revenue (NBR) expects to present a business- friendly budget for 2016-17 which is set to come into effect from July 2016 as per the practice of the country. The BUILD expressed the fear that the country’s SMEs are not ready yet to embrace VAT at so high rate. A committee was formed in 2014 by the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) (as per NBR notification). The committee already met 12 times and set out a set of recommendations and presented it on September 10, 2014 to the Finance Minister. The committee also put forward 10 proposals for review before implementing the new act, in which extension of VAT-exemption threshold limit from BDT 2.4 million to 3.6 million (clause 2(48), fixing the VAT rate at 3.0% up to turnover of BDT 15 million and setting VAT at 4.0% for traders who are unable to obtain rebate and 2.0% for those who sell products at a fixed rate.
Jute export to India soars by 133.0% in 10 months
The country’s earnings from Jute export to India in the July-April period of the fiscal year 2015-16 grew by 133.80% to USD 149.24 million from USD 63.8 million in the same period of the FY 2014-15, according to the Export Promotion Bureau data. Data showed that the export earnings from India in the first 10 months of FY16 increased by 27.5% to USD 551.3 million from USD 432.5 in the same period of the FY15. Readymade garment export to India in the July-April period grew by 30.8% to USD 114.2 million from USD 87.3 million in the same period of last financial year, EPB data showed. Considering the export growth, exporters hoped that earnings from India is likely to be highest ever in the current financial year reading on the performance of jute and apparel sectors. According to the EPB data, export earnings from jute and jute goods fetched USD 729.9 million in the first 10 months of the FY16 while the figure for raw jute, jute yarns and twin stood USD 575.5 million in the same period.
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