The government kept corporate tax between 35%-45% except for some listed companies, ignoring concerns from businessmen.
Economists fear investment in the private sector might fall behind that of the country’s competitors because of the high corporate taxes.
Today, while proposing the budget in the parliament, Finance Minister AHM Mustafa Kamal said, “a notable number of the country’s corporate houses are enjoying tax exemption facility.”
The minister himself agreed that 35% of corporate tax was remarkably high.
Kamal said, “the banking sector’s corporate tax was reduced by 2.5% last year as it was very high.”
“Keeping the country’s revenue generation needs in mind, the existing tax rate will remain this fiscal as well,” he added.
According to the proposed budget, the tax rate is 35% for the stock market’s non-listed companies.
For banks, financial institutions, cell phone operators and tobacco companies, the tax rate range from 37.5% to 45%.
Private entrepreneurs, along with Federation of Bangladesh Chambers of Commerce (FBCCI) and Industries and Dhaka Chamber of Commerce and Industry (DCCI), asked the govt for a 2% reduction in the existing rate from the next fiscal.
“Our corporate tax rate is higher than the rate in neighbouring countries,” said Abul Kashem Khan, ex-chairman of DCCI.
“In contrast to our neighbours, additional business expenses are also high. As a result, real return doesn’t match the investment,” he added.
A KPMG study reveals that corporate tax is highest in Pakistan among South Asian countries.
From 1 July 2019, the rate will be 35% for banks and 25% for small companies in Pakistan.
In India, the corporate tax rate is 30% and this rate applies to Indian companies only.
Indian companies are subject to bear a surcharge of 7% if their revenue exceeds ₹10 million.
For foreign organizations operating in India, the tax rate is 40%
Bangladesh’s another neighbour, Sri Lanka, holds the rate at 28%. The rate is 40% for both the importers and producers of tobacco and alcohol.
In Afghanistan, corporate tax rate is 20%.
According to the KPMG study, corporate tax is highest in United Arab Emirates-55% and the USA takes up the 2nd position with 40% rate.
In developed counties, the rate is relatively high. But the presence of good governance in those countries creates a business-friendly environment thus leading to an increase in overall investments.
Bangladesh’s close competitor, Vietnam charges its companies 20% corporate tax whereas Myanmar, Malaysia and Singapore keeps the rate at 25%, 24% and 17% respectively.