August 21, 2019

Romania announced Tuesday plans to levy a tax on sugary soft drinks to combat obesity, following the lead of other European countries such as France. “This tax is aimed at discouraging consumption (of sugary drinks) and increasing public revenues, which could be spent on health and education,” the finance ministry said in a document made public Tuesday. “The obesity epidemic in the European Union is an enormous burden on health systems,” the document said. The new levy should raise 66 million euros ($74 million) over the rest of 2019 and will come as part of a broader budget review which will also see tax rises on tobacco and budget cuts in certain areas of public spending. The left-wing government is trying to stick a public deficit target of 2.76 per cent this year, but the task has been made harder by increases in pensions and public sector wages brought in in 2018. The centre-right opposition mocked the new tax, pointing out that a similar proposal brought forward by the liberal USR party in April was rejected by the government at the time. Romania’s soft drinks manufacturers’ association condemned the tax as “discriminatory” and said it would damage the sector, which accounts for some 60,000 jobs. According to the KeysFin consultancy, the sweetened drinks market in Romania is worth some 1.2 billion euros.   Source: Punch

The tax exemption benefit given to industrial units inside the economic zones has created disparity between factories outside the industrial enclaves, raising fears of uneven competition among firms producing the same products. The National Board of Revenue in 2015 declared tax benefit on income of businesses inside the economic zones for 10 years based on recommendation from the Bangladesh Economic Zones Authority (Beza) to promote investment and  industrialisation in the country in an organised manner. Tax exemption would be applicable on incomes from all sorts of goods and services to be generated from investment inside the economic zones. Since then, the Beza approved 10 private economic zones apart from developing sites by itself. In the private economic zones, a number of factories churning out edible oil, cement, motorcycles and leather goods has been set up. In government-owned sites, entrepreneurs have shown interest to set up food and agro-processing factories, textile, leather, pharma-ceuticals, steel, ceramic, chemical and paint plants, according to Beza. As the factories inside the economic zones will enjoy tax breaks, especially waiver from paying advance income tax (AIT) and advance tax (AT) during raw material import, they will be at an advantageous position in terms of cost compared with firms outside the zones, said Md Shafiul Ather Taslim, director for finance and operations at TK Group. “Cost to make the same product will be different because of producing in two different premises. It will be tough for small firms to sustain in the competition,” he added. TK, one of the major commodity importers and processors, and some other firms shared their concerns with the NBR last month after two major commodity suppliers — Meghna Group of Industries and City Group of Industries — started processing edible oil by establishing plants in their respective economic zones. Later, the NBR sat in a meeting in the middle of last month.  At the meeting, NBR Chairman Md Mosharraf Hossain Bhuiyan said economic zones are required for industrialisation but because of tax incentives unequal competition has been created within the same industry, according to the meeting minutes. Industry insiders said the difference in tax benefits will not only create uneven competition among firms in the commodity market but also in other sectors. The meeting decided to send the proposal to Beza to change the rule regarding tax incentive to commodities. However, Beza said the tax benefit have been offered to encourage planned industrialisation, encourage compliant and environment-friendly production as well as discourage scattered development of factories. Beza Executive Chairman Paban Chowdhury acknowledged that there are some differences in income tax and without incentives investors will not feel encouraged to set up factories in the zones. “We want all large industries to come to one place. The government will not have to provide gas, electricity and water everywhere to facilitate industrialisation. It will be able to provide all services in a cost-effective, regulated manner.” There is also the issue of establishing effluent treatment plants. “There are some incentives in economic zones and those who will establish industries here, levels of their compliance will be high because of regulation. The issue of compliance is also equally important,” Chowdhury added. Beza said all factories will eventually have to relocate to EZs as per law. Mostafa Kamal, chairman of Meghna Group of Industries (MGI), said his group has cement factory outside the economic zone but it is not questioning the tax benefits enjoyed by Aman Cement Mills set up in the Aman Economic Zone, another private economic zone. The government offers tax benefits to promote industrialisation in regions that are lagging behind. “It is the global norm to give tax holiday when investment is made in underdeveloped areas. None will invest there unless incentives are given.” Kamal said the major steel makers are planning to set up steel mills inside the economic zones.  “What will happen then? Should those who have mills outside say that steel mills cannot be established in economic zones,” he said, adding that no one would go for huge investment unless there are incentives. Chowdhury said there are bound to be some impact with any change. “But ultimately all industries will be benefited,” he said.   Source: The daily

The City of White Rock thinks cities should have that right so it’s looking for support for a proposed motion at the upcoming Union of B.C. Municipalities convention. White Rock is hoping the province will amend the Community Charter to allow municipalities to impose an annual vacancy tax on residential and commercial properties. The City of Vancouver currently has that ability, imposing an annual empty home tax of one per cent of a residential property’s assessed value. Governed by its own charter, Vancouver implemented its vacancy tax a couple of years ago. In a letter to Delta council, White Rock Mayor Darryl Walker noted how Vancouver has already set a precedent through the Vancouver Charter and that similar changes can be implemented for the Community Charter. Municipalities under the Community Charter don’t have the authority to impose taxes or fees beyond basic taxes on property. “We believe that providing local governments this authority is one step closer towards addressing B.C.’s affordable housing crisis,” Walker wrote. He stated larger, expensive homes in his city are sitting empty, reinforcing the need for local governments to address the issue directly. Vancouver’s tax is the first of its kind in Canada and the city estimated it collected $38 million in the first year. Delta finance manager Vivian Koo told the Optimist the city’s finance department currently doesn’t have information on the number of Delta homes that are vacant. “The provincial speculation and vacancy tax is a different tax and targets foreign and domestic speculators and vacant homes in designated taxable regions in B.C. We have asked the province for information on the number of Delta homes that would be subject to this speculation tax but we have not heard back from the province,” Koo said.   Source:  Delta Optimistic

Peter Nwaobi, a tax expert at KPMG, said the proposed 5% VAT on online purchase is not a double tax and there were no initial charges on purchases. Nwaobi explained that for every online transaction, there is always a 5% VAT on every item.  “Before now, for every time you get online, the merchant already charged 5% VAT on it, either you see it on slip or not. it is there.”  He said the fee is what the FIRS is running after as majority of the funds have not been captured in the tax net. “This idea will allow the merchant to remit the 5% they have charged to the bank (acting an agent in this instance).” The government said it is planning to introduce the policy in 2020. The Ministry of Industry, Trade and Investment projected the Nigerian digital sector to generate $88 billion and create 3 million new jobs over the next few years.   Source: Pulse