Corporate tax unlikely to reduce in next budget

Al Amin :
Corporate tax is unlikely to be reduced in the upcoming budget for 2023-24 to increase the pace of revenue collection as the National Board of Revenue (NBR) will have face additional pressure for it.

Besides, the revenue authority is planning to rationalize the existing tax exemptions in different sectors as per the condition of the International Monetary Fund (IMF), NBR official sources said.

They said that the revenue collection target by NBR is likely to be Tk 4.30 lacs crore for the next fiscal year, which is Tk 60,000 crore higher than the current fiscal year.
Currently, there is a corporate tax of 20 per cent for listed companies and 22.5 per cent for unlisted companies. Apart from this, the corporate tax for banks, financial institutions, tobacco companies, mobile phone operator companies is 37.5 to 45 per cent. Around two-thirds of income tax comes from corporate taxes.

Some 7.5 per cent corporate taxes have been reduced in the last three year. Besides, the ratio of unseen income and tax evasion in the country is higher than any other countries. Keeping the reality in mind, the corporate tax is unlikely to be reduced in next budget, although the decision depends on prime minister, the officials said.
Mohammad Hatem, Executive President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told The New Nation, “Pressure on businesses will increase severely due to the decision. NBR must increase tax net to reduce the pressure.”

On the other hand, the NBR is planning for rationalizing the existing tax exemption in next budget as per the condition of Washington-based multilateral lending firm.
The government has given tax exemption in various sectors by issuing more than 200 Statutory Regulatory Orders (SROs) in last 50 years to flourish the domestic industries.

The NBR is now reviewing the SROs and the less important ones will be withdrawn in the next budget, the officials said.
Moreover, there are plans to implement the new Income Tax Act in 2024. Then it will be decided which of the tax exemptions will be given through the SRO and which will be cancelled, they added.

It is a well-established fact that the tax exemptions in Bangladesh are unsustainably high and need to be reined in.
Bringing down the tax exemption facility, which includes complete relief from taxes, reduced rates or tax on only a portion of items, is one of the conditions agreed upon with the International Monetary Fund for the $4.7 billion loan.

Md Jashim Uddin, President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) said, “Before deciding to withdraw tax exemptions, the government should consider the economic importance and impacts of the exemption on the sectors that have been enjoying the facility.”