Currently, publicly traded companies are paying 25% corporate tax, while non-listed companies are paying 30% corporate tax
The Federation of Bangladesh Chamber of Commerce and Industry (FBCCI) has proposed bringing down the corporate tax rate to 22.5% and 30% for publicly traded and non-trade companies respectively for FY20 to increase investment inflow.
Currently, publicly traded companies are paying 25% corporate tax, while non-listed companies are paying 30% corporate tax.
The federation has also urged the government to increase tax-free income limit from Tk2.5 lakh to Tk3.5 lakh in the upcoming budget.
In addition, it also proposes corporate tax for non-manufacturing trade companies at 32.5% for the fiscal year 2019-20, which is 35% in the current budget.
The FBCCI, the apex trade body of the country, has made the proposals to the National Board of Revenue (NBR) and they will be discussed at a consultive committee meeting on Tuesday.
“To attract domestic investment as well as foreign direct investment (FDI), specially in manufacturing industry, and to save the country’s stock markets, the federation has proposed cutting corporate tax,” says the FBCCI in its prposal.
The Dhaka Tribune has collected a copy of the proposal from the apex trade body.
It also calls for bringing down the corporate tax to make it consistent with the regional countries.
The FBCCI also has urged the government to reduce tax at source from 0.6% to 0.25% to help the exporters remain competitive in the global markets.
The trade body has urged the government to set value added tax (VAT) in three tiers — 5%, 7.5% and 10%.
For the past four years, peoples' living standard has been hurt by rising inflation, it says, adding that reduction of income tax encourages people to pay tax and discourage money laundering.
"So, to increase revenue collection and widen the tax net, we are urging the government to increase the tax free income limit to Tk3.5 lakh instead of Tk2.5 lakh," it says.
As per direction of the current budget, a company doing business in Bangladesh has to pay 35% corporate tax, which is 25% for a publicly traded company while the maximum rate extends up to 45% for some sectors.
Bangladeshi entrepreneurs pay the highest corporate tax among the South East Asian counties, which they point out as an impediment in the way of attracting new investments.
Businesses in other South East Asian countries are paying corporate tax ranging between 6% and 15% whereas Bangladesh’s corporate tax rate is higher than the global average as well as the Asian average rate.
According to Tax Foundation data, a Washington-based think tank on US tax policies, the worldwide average statutory corporate income tax rate, measured across 208 jurisdictions, is 23.03% and the Asian average corporate tax rate is 20.65%.
Vietnamese entrepreneurs pay 20% corporate tax while it is 24% in Malaysia, 25% in China, 25% in Indonesia, 25% in Myanmar, 29% in Pakistan, 30% in India and 30% in Philippines, according to data of Dhaka Chamber of Commerce and Industry (DCCI).