The government is contemplating to change the corporate tax structure as well as bringing “out of the box” the high rate of interest on bank loans to provide the country’s real business units with some space to do better.
Finance Minister AMA Muhith dropped the broader hints about restructuring the fiscal and financial system following a meeting with the newly elected board members of Dhaka Chamber of Commerce and Industry (DCCI) at his secretariat office.
“As our corporate tax structure is not appropriate, it should be changed after having consultation with the businessmen,” he told reporters.
The lowest corporate tax in Bangladesh is now 27.5% and the highest 45%. There are, however, tax rebates for listed companies that would declare dividends at rates more than 20%.
The average rate of corporate tax is 42.5% in Bangladesh as compared to 30% in India, 35% cent in Pakistan, 25% in Nepal, 30% in Bhutan, 20% in Afghanistan and 28% in Sri Lanka. In the Maldives, corporate tax is 25% for only commercial banks.
The minister expressed concern over the high interest rates that ranges between 12% and 18%, but said: “We are habituated to take credit from commercial banks with higher interest rates.”
“We have to find out something out of the box to reduce the high bank interest rate that is better for the local businesses,” he said as the DCCI delegation raised the concerns over the issues. They requested the minister to take measures to bring down the interest rate spread to 3% so the credit flow to the private sector gets a momentum.
Regarding Public-Private Partnership initiative, Muhith said a separate guideline has already been formulated for infrastructure projects to be implemented under the initiative, but complete freedom is yet to be given to the new entrepreneurs under this guideline.
The government would soon finalise an infrastructure expressway project from the capital’s zero point up to Mawoa at a cost of $1.5bn.