Cut in corporate tax rate likely

The government is set to bring some major changes on direct tax measures including upward revision of tax-free ceiling for individual taxpayers and trimming down of the corporate tax rate for publicly-traded companies by 2.5 per cent in the budget for fiscal year (FY) 2015-16.

Official sources said the ceiling for individual income tax is likely to go up to Tk 2,40,000 in the upcoming FY.

The tax-free ceiling for individual taxpayers remains unchanged at Tk 2,20,000 since 2012 despite a rise in cost of living and inflation.

Minimum tax for individual taxpayers may also go up to Tk 4,000 for all taxpayers.

Currently, taxpayers in the city corporation areas pay Tk 3,000 as minimum tax. It is Tk 2,000 for taxpayers in district towns, municipalities and Tk 1,000 for other areas.

The corporate tax rate for listed companies in stock exchanges might be brought down to 25 per cent from existing 27.5 per cent. However, tax relief on declaration of dividend may be scrapped with the cut in corporate tax, sources said.

Currently, listed companies declaring dividend above 10 per cent but below 30 per cent can enjoy 24.75 per cent tax instead of 27.5 per cent.

The tax measures were presented to Prime Minister Sheikh Hasina Wednesday for approval. Finance Minister AMA Muhith along with senior officials of the Ministry of Finance, National Board of Revenue (NBR) attended the meeting.

Official sources said tax rate for banks, non-banking financial institution and insurance companies may also see a cut by 2.5 per cent, to 40 per cent from existing 42.5 per cent. But, the final decision has not yet been taken in this regard.

They, however, said initially the authorities concerned have decided to proceed further with the fiscal measures but those might be changed any time with the instruction of the government high-up.  

Another meeting would be held next week with the prime minister for final decision. The government has increased the existing tax-free ceiling by Tk 20,000 for individual taxpayers through the Finance Bill-2012. It remains unchanged until 2014 although there have been 7.0 per cent inflation and higher cost of living.

In the budget proposal for FY 2015-16, the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) proposed to keep upward the tax-free threshold for individual taxpayers to Tk 2,75,000.

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