The Finance Bill for FY 2017-18 is approved in the parliament with desired changes demanded by the business community and cross section of people. In the budget proposal for FY 2017-18 unveiled on June 1, 2017- it was proposed to implement uniform 15% VAT scraping the existing package VAT, truncated VAT, and tariff value facilities. The proposed budget also included the provision of increasing excise duty by 60% on bank deposit to generate more revenue which triggered widespread flak from middle, lower-middle income group as well as in the business community.
Dhaka Chamber of Commerce & Industry (DCCI) welcomes the amendments made in the proposed budget through approving Finance Bill 2017- deferring the plan to enforce the VAT and SD Act 2012 for another two years and reinstating the existing VAT Act 1991 keeping the multi-stage VAT rates replacing proposed uniform 15% VAT.
DCCI also welcomes the new slab of reduced Excise Duty on small Bank deposits from Tk. 800 to Tk. 150 on balance above Tk. 1 lakh to Tk. 5 lakh and Tk. 500 on balance above Tk. 5 lakh to Tk. 10 lakh.
DCCI feels the Finance Bill-approved in the Parliament with postponement of the uniform 15% VAT will encourage business and private investment downplaying the apprehension of steep price hike for wide ranges of products and services along with inflationary stress on the economy. Currently, 20 services under the purview of truncated VAT facility and 179 products enjoy tariff value facility. With the decision of deferment of the New VAT and SD Act 2012, product and services like construction materials, biscuit, juice, spice, transport, apartment, furniture, ICT enabled services, electricity and restaurant etc. may not experience price hike as feared by the cross section of consumers. In the wake of the decision of rationalizing Excise Duty on bank accounts will persuade SMEs, lower middle and middle income group people for savings on bank which is much needed for capital formation and resource mobilization to achieve the desired 7.4% GDP growth set for FY 2017-18.
In the approved Finance Bill, unchanged higher threshold of corporate tax rate is discouraging for local and foreign investment as well as export diversification. However, further reduction of corporate tax for RMG to 12% from 15% and for green RMG factories to 10% from 14% will encourage RMG sector expanding investment and facilitating the $50 billion export earnings target.
DCCI also appreciate the move to withdraw the proposal of increased Supplementary Duty (SD) on completely knocked down (CKD) motor cycle. The move to keep the SD unchanged will help grow the local motor cycle industry attracting fresh investment. In addition, the move of reduction of supplementary duty on locally assembled refrigerator will encourage entrepreneurs to set up import-substitute new industries.
Over 4.5 million solar homes system have been installed supporting the Government’s initiative to generate 10% electricity from renewable sources. The solar energy initiative would have faced set back as it was proposed to impose 10% duty on import of solar panel. The proposed move would have increased the cost of installation of household solar system and solar based irrigation. DCCI welcomes the decision of withdrawal of proposed 10% import duty on solar panels which will support the green energy imitative keeping the price of solar panels at affordable level.
Amid this pro-growth amendments of the Finance Bill for FY 2017-18, DCCI feels that the Budget for FY 2017-18 will accelerate growth and stimulate private sector investment, driving the country to the league of middle income country by the year 2021 envisioned by the Government.