New income tax law will hurt foreign, local investments: experts

Several changes brought in the draft of the Income Tax Law-2023 are likely to hinder local and foreign investment, leaders of the ICAB have said.

“This will create a burden on businesses, hindering investment,” said Mohammed Humayun Kabir, chairman of the taxation and corporate laws committee of ICAB, while chairing a webinar on the proposed FY24 budget and income tax law on Thursday.

Organised by the ICAB, the webinar was titled “Draft Income Tax Act 2023 and Salient Features of Finance Bill 2023-2024”. 

Sabbir Ahmed, a faculty member of ICAB, observed that the new income tax law could impact foreign investment. 

Finance Minister AHM Mustafa Kamal presented the national budget for the fiscal year 2023-24 in parliament on 1 June, and the new Income Tax Act was placed in parliament on 8 June. Since then, there has been a lot of criticism regarding the new law.

While presenting the main article at the webinar, ICAB member Snehasish Barua, partner of Snehasish Mahmud & Company, said the minimum tax on turnover of beverage companies has been increased from 0.6% to 5%. Tax has been imposed on loans taken from foreign sources. If a company has more than one car, additional tax is levied on it, and the responsibility for the proof of submission of return examination is also given to the company. Besides, tax on the sale of property has been doubled.

These aforementioned reasons will create an impact on businesses, opined Snehasish.

NBR former member Farid Uddin said, “Some good changes have been made [in the new law]. Ambiguity has been removed. It has been made even easier, but fundamental change did not come”.

He added that this year 2023 was an unusual year due to the issues of reserve crisis, inflation, and local currency devaluation, and the tax policy should have been taken into consideration accordingly.

Former NBR chairman Md Nasiruddin Ahmed opined that some changes in the proposed budget and income tax laws were not logical.

ICAB President Md Moniruzzaman, Vice President Lutful Hadee, and members of the association, and tax experts were among the participants in the discussion.