The proposed tax on retained earnings of companies listed in the stock market has been slashed from 15 to 10 percent in the face of stark criticism from the business community.
The government made the change on Saturday in parliament while passing the finance bill.
The government also included an exemption provision in the finance bill, saying if a company provides 30% dividend -- both stock and cash -- from its profits, it will not have to pay the 10 percent tax.
The Finance Bill passed by the parliament, brought a number of changes in taxes/duties proposed earlier in Finance Minister AHM Mustafa Kamal’s budget announcement. In his budget speech on June 13, the finance minister proposed 15 percent tax on retained earnings of companies listed in the stock market.
A company will face 10 percent tax if its stock dividend gets higher than the cash dividend.
The finance minister tabled the Finance Bill, 2019 at the parliament earlier in the day, seeking to amend the VAT and Supplementary Duty Act, 2012, Customs Act, 1969, and the Income Tax Ordinance, 1984.
During the parliament session, Prime Minister Sheikh Hasina had proposed five major changes covering income tax, customs and Value Added Tax (VAT). All five proposals have been approved.
Companies will be refunded any VAT paid on raw material purchase if they pay 15% VAT on the finished product.
Acknowledging criticism over the 5 percent Advanced Tax (AT) on capital machinery and raw material imports, the prime minister assured that the government will give out refunds.
To protect local industries, Tk 4 be imposed as VAT on cotton, instead of 5 percent in the proposed budget.
Adding that local paper and gas industries will be affected from customs related proposals, she assured that the government will work to curb misuse of incentive and bond facilities in these sectors.
“We [the government] will change some sections of customs related proposals to boost import of capital machinery and raw material and to protect local industries.”
The prime minister further added that the ongoing situation centring defaulted loans was created during the regimes of military dictators, following the assassination of Father of the Nation Bangabandhu Sheikh Mujibur Rahman.
“We have already taken steps to bring down default loans of banks,” said Sheikh Hasina.
“BNP leaders have earned huge amount money from illegal businesses surrounding the election process. BNP leaders deposited most of the ill-gotten money in Swiss banks, which makes up a portion the Bangladeshi money deposited there,” she said.