Excise duty on bank accounts to double next fiscal year
The government is considering doubling the excise duty on bank accounts with large debit or credit balance in fiscal 2017-18 to boost revenue collection. Accounts with balance between BDT 0.1 million and BDT 1.0 million at any time of a year may be slapped with BDT 1,000 excise tax, up from existing BDT 500, as per the proposal of the Internal Resources Division. For accounts with balance between BDT 1.0 million and BDT 10.0 million, the excise duty would be BDT 3,000. The excise duty would double to BDT 15,000 for balance between BDT 10.0 million and BDT 5 million and to BDT 30,000 for accounts that record over BDT 50.0 million balance. Accounts that record up to BDT 0.1 million in balance, debit or credit, may be exempt from excise duty. At present, no excise duty is charged on balance of up to BDT 20,000. The move to increase the excise duty comes at a time when the number of bank accounts and the average balance on accounts are rising as more and more people come under the banking network thanks to expansion of branches and the government’s push for financial inclusion. In 2016, the number of accounts increased 7.0% to 81.4 million in 2016 and the average deposit per account 6% to BDT 110,457, according to data from the Bangladesh Bank. In the first eight months of the fiscal year, BDT 14.8 billion was collected as excise duty, up 16.0% from a year earlier, according to data from the National Board of Revenue. Bank accounts are the largest contributor to excise duty. The last time the revenue authority raised the excise duty rates was in fiscal 2015-16: by 40-50%.
BB asks banks not to release foreign donations without NGO Bureau nod
Bangladesh Bank on Monday asked banks not to release any amount of foreign donation to any designated person or non-government organisation without approval letter issued by the NGO Affairs Bureau. The BB issued a circular to authorised dealer branches of all banks saying that the persons and NGOs must place the approval letter issued by the NGO Affairs Bureau before the banks to withdraw their foreign donation in line with Foreign Donations (Voluntary Activities) Regulation Act, 2016. According to the act, all persons and NGOs have to receive the donations from the foreign sources through their respective bank accounts.The BB asked the banks to submit the statement of releasing the foreign donation in every six months to the foreign exchange operation department of the central bank. The BB will have to place the statements to the Economic Relations Department and NGO Affairs Bureau, the act said.
BB sets Tk 19,856cr farm loan target for banks for FY18
Bangladesh Bank has set the farm loan disbursement target for banks at Tk 19,856.34 crore for the coming financial year 2017-18, said officials of the central bank. The loan disbursement target is 13.14 per cent higher than that of the current FY17. The BB had set annual farm loan disbursement target at Tk 17,550 for this financial year. A BB official told New Age on Tuesday that the central bank had set the projected target for FY18 in line with the finance ministry’s requirement. Finance minister AMA Muhith will declare the farm loan disbursement target on June 1 in his budgetary speech in parliament, he said. The central bank is likely to revise the target slightly when the agricultural credit policy for FY18 will be finalised. The central bank also set a projected farm loan disbursement target of Tk 21,444.84 crore for FY19 and Tk 23,160.40 for FY20. According to the BB policy, every bank has to disburse at least two per cent of their total lending in the agricultural sector. The BB has set the projected target of farm loan disbursement for FY18 on the basis of the banks’ outstanding loans and advances as on April 30, 2017.
Remittance slid 16 percent year-on-year in the first ten months of the fiscal year in continuation of the sluggish trend that is threatening the country’s foreign currency reserves, growth and poverty reduction efforts. Between the months of July last year and April this year, Bangladesh received $10.28 billion in remittance, according to data from the Bangladesh Bank. The decline in remittance flow from the six Gulf Cooperation countries, the largest labour market for Bangladesh, mainly accounts for the slump. Remittance inflow from Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates shrunk 17 percent to $5.26 billion in the July-March period of the fiscal year. This stands in stark contrast to the huge numbers of Bangladeshi nationals taking up jobs in the six GCC countries in recent years.
International Finance Corporation (IFC) to give USD 10.0 million for SMEs’ development
International Finance Corporation (IFC), a member of the World Bank Group, Tuesday announced an investment of USD 10 million for the development of small and medium enterprises (SMEs) in Bangladesh. The fund—Small Enterprise Assistance Funds Bangladesh Ventures (SEAF BV)– was formed with support from the Climate Investment Funds-Pilot Programme for Climate Resilience (CIF-PPCR), which helps developing countries to scale up for climate resilience, according to a press statement. The investment will boost the financing available for climate resilient small and medium-sized enterprises (SMEs) and strengthen their capacity to address operating difficulties arising from climate change. This equity investment is a USD 10 million blended finance solution from IFC and Climate Investment Funds-Pilot Program for Climate Resilience (CIF-PPCR). SEAF BV, launched by IFC and Small Enterprise Assistance Funds (SEAF) in 2010, is mandated to invest in SMEs in Bangladesh. SMEs are very important to the Bangladesh national economy, accounting for about 80.0% of the country’s industrial employment. Yet, they are faced with a number of constraints including a lack of capital support. The reduced availability of financing in Bangladesh has posed particular economic challenges for small businesses to grow. SEAF BV addresses these issues by working to facilitate transactions in challenging markets and promotes competitive financing, thereby reducing risk and enabling small and medium enterprises to engage in trade.
Bank Asia disburses Tk 52 lakh of German Red Cross among villagers in Hatiya
Bank Asia has distributed Tk 52 lakh among 1,058 villagers of Hatiya in Noakhali as relief on Monday, before the cyclone Mora hit the area. Each person received Tk 5,000 from German Red Cross (GRC), a humanitarian organisation. The cash relief payment was made by Bank Asia using its agent banking digital payment platform, the bank said in a statement yesterday.
Experts link people’s trust to insurance sector’s dev
Speakers at a programme Tuesday stressed the need for enhancing people’s confidence in the insurance sector to help boost the national economy. Despite having immense potential for contributing to the national economy, the domestic insurance sector’s contribution to the GDP would be less than one per cent, they pointed out. They made the observation at the 44th founding anniversary celebration programme of the state-owned Sadharon Bima Corporation (SBC) at a city hotel. Banking division secretary Md Eunusur Rahman, SBC chairman Professor Shibli Rubayat Ul Islam and its managing director Syed Shahriyar Ahsan attended the programme, among others. Mr Eunusur Rahman said insurance is an important sector for the national economy, but the people were devoid of confidence in the sector. “We should take required measures to instill a sense of confidence among them,” he said, urging all insurance related personnel to convey their recommendations and suggestions to the concerned government authorities for restoring public confidence.
Finance Minister Abul Maal Abdul Muhith will unveil the national budget for the fiscal year 2017-18 in the parliament on Thursday as the budget session of the Jatiya Sangsad (JS) began on Tuesday, reports BSS. The new budget will be unveiled at 1:30 pm, according to an official press release issued on Tuesday. The 16th session of the 10th JS will continue until July 13. However, this will be the fourth budget of the Awami League government under the current tenure and 11th of Muhith as the finance minister. Muhith is going to be the first finance minister who is placing the national budget for the ninth time in a row since 2009. The finance minister earlier said that the upcoming budget would be the ‘best budget’ of his life. He hinted that the budget would be worth over BDT 4.0 trillion. He also hinted at increasing the revenue growth target to 30.0% in the new budget. Like in the previous year, the budget this year too will be presented on PowerPoint and will be made available on the website of the finance division-www.mof.gov.bd. The budget documents will also be available on www.bangladesh.gov.bd, www.nbr-bd.org, www.plancomm.gov.bd, www.imed.gov.bd,www.bdpressinform.org and www.pmo.gov.bd and at the BSS website www.bssnews.net. Any person or organisation at home and abroad can send feedback, opinion or recommendation by filling up a form after downloading it from the website. The finance minister will address a post-budget press conference at the Osmani Memorial Auditorium on June 2 at 3:00 pm on Friday. The 16th session of the 10th JS will continue until July 13.
The government has set an ‘ambitious’ revenue mobilisation target for the National Board of Revenue for the upcoming fiscal year (2017-2018), envisaging the highest collection — Tk 87,887 crore — from value-added tax riding on the new VAT law. The government anticipates getting around 35.50 per cent of the total tax collection target of Tk 2,48,190 crore from VAT as it expects a significant boost in VAT collection after implementation of the new VAT and Supplementary Duty Act-2012 from July 1 this year. The VAT collection target is Tk 72,764 crore for the outgoing fiscal year of 2016-2017. In the next fiscal year, the second highest revenue — Tk 86,867 crore or 35 per cent of the total collection target — will come from income tax, according to the revenue board. The remaining Tk 73,436 crore or 29.50 per cent will be generated from customs duty. Targets of income tax and customs duty collection in the current fiscal year are Tk 71,940 crore and Tk 55,670 crore respectively.
NBR urges Power Division not to pass on new VAT rate to subscribers
The Value Added Tax (VAT) Wing of the NRB has requested Power Division to declare the current electricity tariff plus 5.0% VAT as supply price following enforcement of the new VAT law from July 01 next. VAT policy member Jahangir Hossain sent a letter to the power division secretary on Tuesday to consider the present power tariff at the consumers’ level as MRP (maximum retail price). VAT Wing has taken the move to dispel fear among consumers about the possible rise in power tariff after implementation of a uniform VAT rate under the new VAT and Supplementary Duty Act 2012. Currently, there is 5.0% VAT on power tariff that might be raised to 15.0% after implementation of the new law from July 1. The NBR letter said now there exists 15.0% VAT indirectly and 5.0% directly on power tariff. Power Division pays 15% VAT on purchase of inputs, including fuel, gas and coal, under the existing VAT Law 1991. It will be able to claim refund of the paid VAT under ‘input credit system’ according relevant provision in the new VAT law. The provision is not there in the current law. As the government offered VAT exemption in power generation and imposed 5.0% truncated-base VAT on supply stage, Power Division is not allowed to claim the tax refund on inputs. The new law has addressed the ‘distortion’ in the VAT system. Valuation process of products and services will be changed in the new VAT law. Consumers will pay less VAT to the government under the new law even though power tariff remains the same, the letter said. The existing VAT law has two processes – VAT inclusive and exclusive, but the new law has the provision to conduct valuation only on VAT inclusive. Prices of services and products will be VAT inclusive under the new law. For example, per unit power tariff is BDT 9.0 and after adding 5.0% VAT (BDT 0.45) it stands at BDT 9.45. In the new law, VAT on power tariff will be calculated to the amount of BDT 1.23 on the total power tariff of BDT 9.45. However, Power Division can claim refund on the paid VAT on purchase or import of inputs for power generation.
2nd phase gas price hike for households and motor vehicles comes into effect tomorrow
The Supreme Court cleared the way for the government to raise prices of gas for households and motor vehicles in the second phase, report agencies. Supreme Court’s chamber judge stayed on Tuesday the High Court order that stayed for six months a government decision for raising gas prices for all consumers in the second phase with effect from June 01 next. Chamber Judge of the Appellate Division Justice Syed Mahmud Hossain passed the order after hearing a petition filed by the Bangladesh Energy Regulatory Commission (BERC). The court also sent the petition to the regular bench of the apex court for hearing on June 05. The concerned lawyers told reporters that the decision of raising gas prices will be effective from June 01 following today’s (Tuesday’s) order. Talking to reporters, Attorney General Mahbubey Alam said there is no legal bar to raise gas price from June 01. Earlier, on February 28, the High Court stayed for six months the government decision for raising gas prices following a petition filed by engineer Mobeshwar Hossain on behalf of Consumers Association of Bangladesh (CAB). The court also issued a rule asking the authorities concerned to explain why the government’s move to raise gas prices will not be declared illegal. Later, the BERC filed a petition seeking a stay on the HC order. On February 23, gas prices were raised for all types of consumers in two phases as per the BERC decision. Household consumers have been paying BDT 750 for single burner while BDT 800.0 for double burner a month for the first phase gas price hike which took effect on March 01. Earlier, gas price was BDT 600.0 for single burner and BDT 650 for double burner. The same consumers will have to pay BDT 900.0 and BDT 950.0 for single and double burners respectively from June 01.
The government should introduce a rational tax regime for the mobile operators and resolve disputes in the sector to help establish a ‘digital Bangladesh’, a senior official of Robi said. “We are expecting a positive signal from the government in the upcoming budget,” Mahtab Uddin Ahmed, chief executive officer and managing director of Robi, told The Daily Star in an interview. The operator is watching out for the government’s stance on SIM and corporate taxes in fiscal 2017-18’s budget announcement tomorrow. In 2011, the SIM tax was BDT 600.0 and the industry’s contribution to the economy then was 3.2%. The SIM tax was halved in 2013 and the operators’ contribution rose to 4.9%. In 2015, the SIM tax was brought down to BDT 100 and the industry’s contribution edged up to 6.2%. The rate of corporate tax, which stands at 45.0%, also needs to be brought down to the minimum level and the tax on consumption also needs to be lower to incentivize people to spend more. The industry can contribute up to USD 17.0 billion and create 0.82 million jobs, directly or indirectly, in 2020 if an enabling environment is created for mobile operators, Ahmed said referring to a report of GSM Association.
Bangladesh wants India to relax lines of credit (LoC) terms
The authorities concerned have sought relaxation of the conditions attached to procurement of goods and services for the projects being implemented under two Indian lines of credit (LoCs) worth USD 6.5 billion. The implementing agencies of the projects have been facing difficulties in completing necessary purchases due to the limited bidding system and inflexible terms of the Indian loans, officials said Tuesday. The difficulties also have caused delays in implementation of the projects. They said the project authorities requested relaxing the conditions of the second and third Indian credit at a meeting between economic relations divisions (ERD) of Bangladesh and the representatives of the Indian government in Dhaka on Monday. An ERD official said they had decided to sit with the secretaries and high officials of the implementing agencies of 31 projects under the LoCs in the first half of June. They would also invite economic advisor to the Prime Minister Dr Mashiur Rahman at the meeting. According to the terms and condition of the USD 862.0 million LoC-I, Bangladesh has to procure at least 75.0% of the goods, services and works from India. Under the second LoC, Dhaka will have to procure at least 75.0% of the goods, services or works from India. But in some cases like for civil works, Dhaka could purchase only 65% from Indian market while the rest 35 from Bangladesh market.
Joy knows no bounds for some 70 mango growers from Meherpur, who would be sending 250 tonnes of the tropical summer fruit to Europe this year. Neck-deep with the tasks of plucking and packing the Himsagar variety of mangoes, but there is no sign of fatigue in their deportment. “I am expecting a handsome return,” said Saidur Rahman Shahin, a mango grower from Jhaubaria village in Meherpur who is hoping to earn Tk 8.50 lakh from his efforts. Shahin is one of the 70 growers who entered into deals with the Bangladesh Export Association and the Department of Agricultural Extension to send mangoes abroad.
The mobile phone operator Citycell has claimed that the entity has already paid an excess Tk 129.27 crore to the Bangladesh Telecommunication Regulatory Commission for different charges and fees of the regulator. The operator came with the claim last week following a showcause letter of the telecom regulator to Citycell. On April 26 this year, the regulator in a letter asked Citycell as to why legal action would not be taken against the operator for non-payment of fresh dues to the commission for the period of October 2016 to March 2017, a BTRC official said. The telecom regulator in the notice also asked the operator to explain in thirty days why legal action would not be taken against the operator on the same ground. The mobile service of Citycell has remained suspended for the last few months following a dispute with the regulator over non-payment of dues worth around Tk 377 crore accumulated till October 2016, a BTRC official said. The Citycell reply issued by its chief executive officer Mehboob Chowdhury said that the operator has already paid Tk 476.27 crore as spectrum charge, license fee, revenue sharing and social obligation fund to the telecom regulator for the operator’s dues till the third quarter of 2016.
Bangladesh may get benefit from Indian cattle slaughter ban
Exporters see Bangladesh is benefiting from the ban on cattle slaughter in India. The leather produced in India contains certain type of grains which leather from countries like South America and Africa do not have. “Bangladesh’s leather is more akin to that of leather manufactured in India,” said Nafis of Zia Hide Skin Agency, who has a factory in Chennai. Md Ibrar, director of Adiba Leather, is worried about the supply of raw hide, according to a report by economictimes.indiatimes.com. “We supply bags to international brands such as Gerry Weber. We are also expecting calls from them,” he said. “I am not sure what will happen next.” India’s curbs on cattle slaughter are making international fashion houses worried. Brands such as Zara, Marks & Spencer, Prada, Hugo Boss and Armani, or their agents, have started contacting suppliers in India, enquiring whether they would be able to meet their commitments on supplying footwear, handbags, jackets, belts and other products.
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