In response to FE's clarification in its issue of June 03, 2014 on my article under the heading 'Widening the tax net' published on the previous day (June 02, 2014), I have to say the following:
First, the purpose of my paper was not to compare inter-country tax rates but merely to show that there was no empirical rationale for lowering the rate of corporate income tax (CIT) in the FY15 budget.
Second, there is some misunderstanding of what you have called a few 'factual errors'. Just as your learned readers have indicated, I too mentioned clearly in my article that the CIT rate for publicly listed companies in Bangladesh was 27.5 per cent, but the CIT rates applied to non-listed companies and banks (and financial institutions) were well above those in other countries. There was thus no factual error here. I did not, however, mention that tobacco and telecom sectors faced still higher taxes in this country.
Thirdly, in your clarification you have said that, considering the various sources from which the bulk of the CIT is collected, the CIT in Bangladesh is the highest among South Asian countries. You have not said what the 'weighted average' rate of CIT in Bangladesh currently is but you have informed the readers that the average rate of CIT is 30 per cent in India, 34 per cent in Pakistan, 28 per cent in Sri Lanka, and 30 per cent in Bhutan. Given, however, that non-listed companies in Bangladesh can get the benefit of a lower tax rate of 27.5 per cent as soon as they are registered in the stock exchanges, it cannot be said that the CIT rate in Bangladesh is the highest among the South Asian countries. The de jure tax rate for these companies is thus 27.5 per cent, which is lower than in any other South Asian country. One may question why hundreds of such companies registered with the Registrar of Joint Stock Companies deliberately refrain from becoming publicly listed.
There is, thus, no conflict between your editorial stance and my observations on the matter.
Ayubur Rahman Bhuyan, former Professor of Economics, University of Dhaka. arbhuyan@yahoo.com
A response to clarification
FE Team | Published: June 08, 2014 00:00:00 | Updated: November 30, 2026 06:01:00
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