Card Cashbacks Call: 5% Incentive Proposed to Boost Digital Payments
Business leaders have called for a 5 percent incentive on card-based transactions to expand digital payments and reduce reliance on cash. The proposal was presented by the American Chamber of Commerce in Bangladesh (AmCham) during a pre-budget discussion held on Sunday, April 5, at the NBR Building in the capital.
The organization stated that under the proposed incentive, 3 percent could be allocated to consumers and 2 percent to merchants. This, they believe, would reduce cash usage and enhance transparency in transactions.
The session was chaired by Md. Abdur Rahman Khan, Chairman of the National Board of Revenue (NBR), and was attended by senior officials from the NBR and various business associations.
AmCham noted that the growth of the e-commerce sector and increased use of digital wallets have already reduced reliance on cash and improved transaction transparency. It has also made fund transfers easier for small and medium enterprises. With the introduction of cash incentives, digital transactions are expected to increase further, accelerating the development of a “cash-light” economy.
It was proposed that initially banks, businesses, or mobile financial service (MFS) providers could offer the incentive. Later, coordination could be carried out through the Ministry of Finance or Bangladesh Bank.
Ahead of the upcoming national budget, AmCham also put forward several recommendations to create an investment-friendly environment. These include simplifying tax policies, increasing digital transactions, and formulating business-friendly policies.
Regarding tax deduction at source, it was proposed that if corporate tax is determined under Rule 39, the rate should be set at 4.125 percent, and otherwise at 5.25 percent. Additionally, it recommended maintaining a uniform tax rate of 37.5 percent for both foreign and local commercial banks.
To promote digital transactions, AmCham proposed reducing duties on smart cards and Point of Sale (POS) machines to below 15 percent. It also called for reducing supplementary duty on carbonated beverages from 30 percent to 15 percent, noting that the current 54 percent tax burden in the beverage sector is increasing production costs and hindering investment.
Further proposals included bringing waste collection and supply services in the ready-made garment sector under VAT exemption, reducing tax rates to encourage foreign portfolio investment, among others.
Meanwhile, the Bangladesh China Chamber of Commerce and Industry proposed setting the maximum personal income tax rate at 20 percent and waiving surcharge on assets up to 100 crore taka. These proposals were presented by the organization’s President Khorshed Alam. They also recommended making it mandatory for the garment industry to source 50 percent of raw materials locally.
The Bangladesh Women Chamber of Commerce and Industry proposed setting the personal income tax threshold at 450,000 taka, reducing trade license fees by 50 percent, and providing VAT exemptions for showrooms owned by women entrepreneurs.
Additionally, EuroCham Bangladesh emphasized the importance of investment-friendly tax policies, process simplification, and signing a Free Trade Agreement (FTA) with the European Union.
DBTech/DHE/EK/OR
