Govt moves to review some major fiscal measures

The government has moved to review some major fiscal measures taken in the budget for 2010-2011 after it found the measures causing hurdles in business.

The ministry of finance is set to review capital gains tax on individual ownership, 15 per cent Value Added Tax (VAT) on rented space and 10 per cent supplementary duty (SD) on painting industry.

It will also scrutinise the impact of inclusion of Zakat fund with income tax, review justification of maintaining documents of VAT for six years and reduce tax burden on existing income tax payers.

Finance Minister AMA Muhith recently sent 13-point recommendations to the revenue board for reviewing the measures on an urgent basis.

"I have found a number of issues in a post-budget review. I also hinted to reconsider the matters in my budget speech. It is necessary to start work with those issues from now on," Muhith wrote in a letter sent to the National Board of Revenue (NBR).

"Additional income tax should come from the newly registered tax payers. It is not right to impose tax burden on existing tax payers," Muhith wrote.

The finance minister also underscored the need for completion of overhauling the VAT law. The government will first exchange views with different chambers for their opinion.

The finance ministry will also seek written opinions from Metropolitan Chamber of Commerce and Industry (MCCI) and Dhaka Stock Exchange (DSE) to resolve confusions on capital gains tax for individual ownership.

The government imposed five per cent tax on income of sponsor shareholders or directors of companies engaged in trading in the Dhaka and Chittagong stock exchanges and three per cent tax on the shares of companies sold at a premium value.

Talking to the FE, DSE President Shakil Rizvi said: "We have several times raised the question on capital gains tax on premium. Premium is not income."

The DSE is yet to propose the measures officially, he added.

"There is confusion on gains tax on ownership of shares by generation," he said.

On tax on rented space, Dhaka Chamber of Commerce and Industry (DCCI) President Abul Kasem Khan said: "We have proposed to waive the measure in budget for the current fiscal. Cost of doing business spiked with the measure."

VAT on rented space is not justified as there is no value addition, he added.

The government slapped 15 per cent VAT on rented space in the budget for 2008-09.