Government’s decision of 20 per cent corporate income tax for textile industries has faced opposition from Bangladesh Textile Mills Association (BTMA).

Chairman of BTMA, MA Awal said, Similar industries of readymade garments and knitwear have seen their corporate income taxes reduced from 30 per cent to 10 per cent but, for textile industry, the rate has been reduced from 30 per cent to only 20 per cent, The measure is a discriminatory one which will adversely affect the export-oriented textile industry.

He said the government gives tax privileges to ready made garments (RMG) sector for its export-earnings but the government does not take into account that it is the textile industry which supports the RMG sector by supplying fabric.

If textile mills did not provide the raw materials, RMG sector could
not have succeeded and boasted a 76 per cent share of the country's total export earning, he said.

He lauded the 20 percentage point proposed reduction of corporate tax rate for RMG industries for the period up to June 30, 2006 and demanded the same for textile industry.

"Reduction of tax rate will help build up backward linkages and
stabilise RMG sector's position in world market. The measure will help strengthen competitiveness of garment export in the international market," he said.

As cash incentives for the textile sector are to be phased out by 2005, BTMA urged the government to continue the existing cash assistance rate of 15 per cent.

The association, however, expressed its satisfaction over withdrawing advance income tax (AIT) in the budget on 175 items keeping in view complete AIT withdrawal in phases in future.

BTMA chairman appreciated the Finance Minister for his proposal to recast the corporate tax rates aimed at encouraging more companies to enlist at stock exchanges.

Under the proposed measure, the tax rate for non-listed companies will be fixed at 37.5 per cent while the rate for listed companies will remain unchanged at 30 per cent. This tax gap of 7.5 per cent between listed and non-listed companies will woo more companies to the capital market, he said.

BKMEA lauds budgetMonjurul Huq, president of Bangladesh Knitwear Manufacturers and Exporters' Association (BKMEA), welcomed the proposed reduction of corporate tax rate for RMG industries from 30 per cent to 10 per cent.

He said the measure will help develop backward and forward linkage industries and help the key sector prepare for quota-free regime. He, however, expressed his dissatisfaction over 15 per cent import duty on chemical and spare parts of textile industry, which remained unchanged in the budget.

FICCI's mixed viewsForeign Investors' Chamber of Commerce and Industry (FICCI) has sharply reacted to some measures in the proposed budget for 2003-04 that will discourage foreign nvestment and make business difficult.

The measures are: rise in income tax rates of financial institutions by 5 per cent and non-listed companies by 2.5 per cent, mposition of a dividend distribution tax and the proposed steps to limit the tax deductibility of legitimate costs for technical fees and royalties.

"Each of these measures will discourage foreign investment in
Bangladesh and increase the cost of doing business for existing enterprises," the FICCI said after its members reviewed the budget at a meeting recently.

The chamber, however, applauded some 'meaningful steps' proposed for broadening the tax net and past successes including the reduction of budget deficit in last 12 months and improved revenue collection in the previous fiscal year.

"We also note that foreign investors continue to bear a
disproportionate share of the total tax burden. This situation is not sustainable in the long term," said a FICCI press release signed by its president Waliur Rahman Bhuiyan.

They also expressed concern over the methods being adopted to widen the tax net which they said will increase the discretionary powers of tax officials.

CSE lauds incentivesChittagong Stock Exchange (CSE) lauded the government proposal for making dividend income tax-free and increasing the tax gap between listed and non-listed companies in the budget.

The corporate tax rate for listed companies of 30 per cent and
non-listed companies of 37.5 per cent is likely to encourage more companies to get listed with the stock exchanges, CSE said.

The budgetary measures will help revitalise bourse market, it said.