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SMEs require supportive tax policies for inclusive growth in South Asia

conf Supportive fiscal policies along with simplification of procedural complexities concerning taxation will make Small and Medium Enterprises (SMEs) more tax-compliant in South Asian countries, revealed a study conducted by South Asian research think-tanks including Centre for Policy Dialogue (CPD). Lack of good governance, administrative weaknesses of tax authorities, institutional failures and low awareness of SME entrepreneurs as regards taxation, were the main concerns identified in the study on the impact of tax policy on SME development conducted in Bangladesh, India, Pakistan, Nepal and Sri Lanka. Major findings of the study titled “Tax Policy and Enterprise Development in South Asia” were shared at a dissemination programme with students at Conference Hall, Faculty of Business Studies in University of Dhaka on Thursday, 27 February 2014. The study was conducted by Centre for Policy Dialogue (CPD), Dhaka; National Institute of Public Finance and Policy (NIPFP), New Delhi; Institute for Integrated Development Studies (IIDS), Kathmandu; Beaconhouse National University (BNU), Lahore; and Institute of Policy Studies of Sri Lanka (IPS), Colombo respectively. vid-con2 Researchers from the abovementioned organisations participated at the dissemination programme over a video conference to share the highlights of their research findings. The regional research programme is being coordinated by Governance Institutes Network International (GINI), Islamabad with support from International Development Research Centre (IDRC), Ottawa. Professor Dhiman Kumar Chowdhury of department of Accounting and Information Systems (AIS) at DU chaired the event, moderated by Professor Mustafizur Rahman, Executive Director, CPD. In his introductory statement, Professor Rahman stated that despite establishment of institutions and efforts of South Asian governments, the SME sector remained neglected and low on the priority list of the policymakers in the region. While presenting the study, Dr Khondaker Golam Moazzem, Additional Research Director, CPD said that survey conducted in Bangladesh has shown that tax exemptions and concessions in Bangladesh favour large enterprises and that most SMEs are unwilling to have tax registration. This was one of the complexities of taxation system which they tried their best to avoid. Professor Swapan Kumar Bala of AIS, DU and Mr Towfiqul Islam Khan, Research Fellow, CPD presented selected sessions of the Bangladesh country study. The Chair, presenters and designated discussant Dr Mizanur Rahman, Associate Professor of Accounting and Information Systems at DU, responded to questions raised by the participating students of University of Dhaka. Participating researchers from India and Sri Lanka particularly mentioned over the video conference that SME entrepreneurs reported increasing cost of compliance and arduous compliance procedure; high cost of land acquisition; need for lowering tax and VAT; lack of awareness about tax exemption for SMEs etc. Mr Daniyal Aziz, Team Leader of the study and Advisor, GINI, said that the research project, apart from its academic side, examines the institutional, policy and advocacy aspects of promoting the SME sector in South Asia. The research seeks to give voice to the SME and a formal recognition which is long due, he added. students One of the major activities envisaged under the dissemination programme was to invite graduate and post-graduate-level students to dialogues, raise their sensitivities to attendant issues, and give the students and faculty members an opportunity to share their views. The aforesaid event was a part of this dissemination exercise and outreach. CPD will publish a monograph based on the outcomes of the study by July 2014. Read more about the research

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