The country’s leading associations of financial institutions (FIs) has demanded the National Board of Revenue to reduce corporate taxes to the level most other listed companies are now paying.
They said the FIs are listed companies and their taxes should be set at 37.5%.
Bangladesh Insurance Association representative G K Roy said the tax on life insurance and non-life insurance companies are same, which is not justified.
“In the neighboring country India, life insurance companies are paying 12.50% taxes and 2.50% additional surcharge. So, the income tax rate for the life insurance companies here should be set at 15%.”
The association leader made the demand at a meeting with National Board of Revenue at the NBR headquarters in Dhaka yesterday. NBR Chairman Md. Ghulam Hussain chaired the pre-budget meeting with the representatives from financial institutions.
Roy pointed out that the insurance agents have to pay 5% tax at source if they earn over Tk40,000. Now they have to pay 5% tax on their entire commission. As the tax-free ceiling for the individual taxpayers has been set at Tk220,000, he urged NBR to set a tax limit on agents’ incomes.
Bangladesh Leasing and Finance Companies Association has demanded including the name of ‘financial institutions’ with the section 23 (6) of Income Tax Ordinance 1984.
The section says the income of the institutions, mentioned at the section by way of interest in relation to such categories of bad or doubtful debts as the Bangladesh Bank may classify in the income year in which it is credited to its profit and loss account for that year or, as the case may be, in which it is actually received, whichever is earlier.
“Though the tax rates for banks or financial institutions are set at 42.5%, sometimes we are paying 55% taxes due to doubtful taxes. Currently, we are paying same duties as paid by the bank, leasing or insurance companies, which needs to be reduced and should be set at 37.5%,” said Md Ziaul Hoque Khan of the association.
He also proposed for allowing banks, insurance companies and financial institutions to avail of the tax exemption on the income derived from zero coupon bonds.
Bangladesh Merchant Bankers Association Vice President Md Akter Hossain Sannamat proposed the NBR to reduce corporate tax of merchant banks to 27.50%.
“The merchant banks are making losses from 2010 due to the instability in the stock market whereas corporate tax of merchant banks is higher than the asset management companies or the stock brokers. We think the corporate tax for the merchant banks should be set at 27.50%,” he said.
He requested NBR to publish statutory regulatory order for initiating incentive package for the merchant banks to cover up the losses which these institutions are making from 2010.
The association’s other proposals includes treating 1% general provision and specific provision as tax deductable, treating write off losses of merchant banks as tax deductable, and avoid double taxation on dividend income of the banks.
