Finance Minister Abul Maal Abdul Muhith has proposed 2.5% corporate tax reduction for listed companies.
The minister made the proposal while placing his Tk 2.95 trillion national budget for 2015-16 at the National Parliament on Thursday.
The minister proposed to reduce corporate tax rate for publicly traded bank, insurance and financial institutions from 42.5% percent to 40%.
Muhith has also proposed corporate tax reduction for other institutions listed at the stock market, from 27% to 25%.
However, the corporate tax for non-listed companies and merchant banks will remain the same. Presently, non-listed companies pay 42.5% tax while merchant banks pay 37.5%.
Recently, foreign investors and Bangladesh Merchant Bank Association (BMBA) demanded reducing the corporate tax.
The BMBA demanded a 15% tax cut from the existing 37.5% as asset management companies pay tax at 15%.
According to foreign investors, they have to pay an extra 15% to 20% tax, in addition to the regular corporate tax rate due to very high dis-allowances on account of royalty fee and excess prequisites.
Because of these issues, the effective tax rate has become 50% to 55% for non-publicly traded companies.
