Minimum Tax of Tk 2,000 for Taxpayers Seeking Services

The draft Income Tax Law 2023 in Bangladesh proposes significant amendments to outdated tax laws, aiming to make them more user-friendly for individuals and businesses. However, it appears to favor the whitening of black money, disregarding the concerns of honest taxpayers.

Bangladesh's budget deficit projection for FY24 could face challenges if economic growth falls short of expectations, warns a report by Fitch Ratings. Historically, fiscal outcomes in Bangladesh have deviated from budget forecasts due to underspending against targets. Revised figures for FY23 showed a budget deficit of 5.1% of GDP, lower than the initial target of 5.5%.

The National Board of Revenue (NBR) has announced an extension of the bond licence period from two years to three years for export-oriented industries operating in Export Processing Zones (EPZs). This move aims to support exporters and manufacturers while improving the ease of doing business. The NBR issued a Statutory Regulatory Order (SRO) to implement this change.

The government is contemplating classifying tax exemptions as subsidies, a move that has drawn skepticism from economists and policy analysts. Sources at the National Board of Revenue reveal that the government's estimated direct tax expenditure in the upcoming fiscal year (FY24) could reach Tk1.78 lakh crore, while direct government subsidies might stand at Tk1.10 lakh crore. By categorizing tax exemptions as subsidies, the total subsidy amount would reach Tk2.90 lakh crore in the next fiscal year.

The upcoming budget for FY2023-24 is expected to include significant proposals aimed at boosting tax revenue, expanding the tax net, and reducing income disparity. Finance Minister AHM Mustafa Kamal is likely to propose raising the tax-free income limit for various categories. The limit may be increased to Tk 3.5 lakh for general individuals, Tk 4 lakh for females and senior citizens, and Tk 4.75 lakh for physically challenged individuals.

The National Board of Revenue (NBR) in Bangladesh faces the challenge of earning 16% more revenue in the next fiscal year to support a Tk7.6 lakh crore annual budget. Revenue growth turned negative in April for the second time since the pandemic, with a 2.29% decline compared to the previous year. Factors such as lower imports, income tax, and travel tax contributed to the shortfall, despite a 15% increase in value-added tax (VAT) collection.