Bangladesh Merchant Bankers Association (BMBA) suggested that the tax gap between listed and non-listed banks and financial institutions (FI) should be increased to 10% as opposed to the reductions proposed in the budget FY19 on June 7.
Corporate tax has been reduced by 2.5% for both listed and non-listed banks and financial institutions and the tax gap between the two is also 2.5%, they said in statement issued yesterday on the proposed budget FY19.
They did however welcome the reduction of corporate tax for textile companies that earns around 80% of total export as it will encourage further export growth.
“The tax gap between listed and non-listed companies in the textile sector is 2.5%. The tax gap should be 7.5% for listed companies, meaning 7.5% tax for listed companies and 15% for non-listed companies in textile industry,” the statement said, advocating for higher tax gaps for them as well. “This needs to be done as listed companies are more transparent than non-listed companies and pay more tax compared to the non-listed companies,” the statement said.
BMBA further demanded the reduction in the capital gain tax for institutions by 5% from existing 10%. “It’s good attempt to prevent frequent use of collateral assets by introducing database used against all types of loans. This will bring discipline,” they said.
In the proposed budget for FY 2018-19, deficit financing from banks has been targeted at Tk42,000, compared to Tk20,000 in the revised budget for FY 2017-18, which is not feasible according to the present financial scenario, said BMBA.
It also proposed similar tax rates for asset management companies, merchant banks and stock brokerages etc to ensure level playing field in the sector.
Currently, the tax rate is different for capital market intermediaries such as 15% for asset management companies and 37.5% for merchant banks.