The government is likely to reduce 7.5 percent corporate tax from next fiscal year to ease pressure on manufacturing and services sector generated by Covid-19 pandemic, ministry sources said.The budget officials are working on the issue and are preparing a position paper for the Prime Minister Sheikh Hasina.
“The Finance minister AHM Mostafa Kamal on Monday asked the Bangladesh Bank, the National Board of Revenue, and Financial Institutional Division to prepare a position paper on how the NBR would reduce the corporate tax in the next 2020-21 fiscal year,” the budget official preparing anonymity told Business Mirror Wednesday.
The finance minister has also under strong consideration to reduce the corporate tax for rest of two months of current fiscal years to ventilate entrepreneurs in the suffocating shutdown, said the official.
On April 5, Prime Minister announced the stimulus package worth Tk 67,750 cr to enhance its effort to overcome the economic losses due to the coronavirus situation.
Bangladesh Merchant Bankers Association (BMBA) has prepared a set of budget proposals including reduction of corporate tax for listed companies further.
“Many competitive companies will be inspired to go public if the amount of corporate tax is reduced. The government’s revenues will be enhanced for this,” the BMBA proposal said.
Presently, merchant banks pay 37.50 per cent corporate tax, brokers 35 per cent and asset management companies 15 per cent.
Bangladesh has eight slaps of corporate taxes, starting at 25% for listed companies and going up to 45% for cigarette manufacturers.
Some 35% tax is applied to non-listed companies and higher rates of taxes are slapped on banks, financial institutions, and mobile phone operators.
By comparison, with the tax rates in South Asian countries, including India, hover between 15% and 30 %,
As per the directive from prime minister Sheikh Hasina the finance division has decided to provide subsidy on the interest of the bank’s credit till December 2020 as the local industries have severely affected by COVID-19 pandemic during the last four months.
Sources in the finance ministry said the loan defaulters will not receive interest on loan waiver facilities.
The finance division is yet to finalize the amount money will be needed for waiver the bank loan interest rate.