Days of protection are over, Finance Adviser tells businesses

Despite years of tax exemptions and policy support, domestic industries remain reliant on protections, said Finance Adviserr Salehuddin Ahmed. 

Speaking at a seminar on VAT Day and VAT Week-2024, held at the National Board of Revenue (NBR) Multipurpose Hall in Agargaon on Tuesday, he urged businesses to step out of their comfort zones and embrace competitiveness.

“Many businesses still act like children, asking for protection after years of growth,” Salehuddin remarked. “But the days of protection are over. As Bangladesh transitions to a developing country by 2026, we must shed this dependency to remain competitive.”

The seminar, presided over by NBR Chairman Md Abdur Rahman Khan, included key figures like Finance Secretary Dr Md Khayeruzzaman Majumder, FBCCI Administrator Md Hafizur Rahman, and former FBCCI Director Abdul Haque. NBR Member (VAT Policy) Mohammad Belal Hossain Chowdhury presented the keynote address.

Salehuddin pointed out that despite consistent support, many businesses evade taxes and VAT, harming the economy and attracting scrutiny from donor organisations. “Questions are raised about Bangladesh’s tax-GDP ratio and revenue policies. To address economic challenges, we must increase tax revenue without compromising priority sectors like health, education, and transportation,” he added.

The adviser also highlighted the importance of collaboration between the NBR and businesses. "We must enforce tax compliance but also listen to the concerns of affected stakeholders. Cooperation is key to achieving our revenue goals," he said, noting frequent complaints from traders about the NBR’s limitations and mandates.

NBR focuses on reforms

NBR Chairman Md Abdur Rahman Khan emphasized the challenges of increasing customs duties due to WTO regulations and their direct impact on consumers. “Our primary sources of revenue are VAT and income tax, but there’s a significant gap in VAT collection. Traders often fail to deposit VAT collected from customers into the treasury,” he said.

Keynote speaker Mohammad Belal Hossain Chowdhury detailed the NBR’s recent reforms, including automation efforts and enhanced VAT audits. Since August 5, the VAT Intelligence Department has uncovered evasion worth Tk 159.66 crore and recovered Tk 61.16 crore. A special committee has also registered nearly 10,000 businesses for VAT in the last three months.

FBCCI Administrator Md Hafizur Rahman suggested reducing VAT rates to widen coverage, especially in the service sector, and proposed exemptions for new businesses to encourage growth. “Awareness campaigns are crucial to instill a culture of tax compliance and reduce VAT evasion,” he added.

The seminar concluded with a call for mutual responsibility: traders were urged to fulfill their obligations, and the NBR pledged to improve its services and transparency.