Listed financial cos to get corporate tax cut

Doulot Akter Mala | May 31, 2015 00:00:00

The country's publicly-listed commercial banks, insurance companies and non-banking financial institutions (NBFIs) are likely to see a cut in their corporate income tax rates by 2.5 percentage points in the upcoming fiscal year, sources concerned said.

The government may cut the corporate tax rate to 40 per cent from existing 42.5 for the banks, insurances and FIs that are listed on the bourses.

Currently, both listed and non-listed banks, insurance and NBFIs are paying corporate tax at a rate of 42.5 per cent. There is no additional benefit for the banks that have off-loaded shares in the capital market.

From FY 2015-16, listed banks, insurance companies and FIs are likely to pay 40 per cent corporate tax while non-listed ones will continue paying the tax at old rates.

According to the stock exchange data, some 30 commercial banks, 23 NBFIs and 46 insurance companies are listed on the capital market.

Officials said existing nine foreign banks and nine new banks will not get the facility as those are not listed on the stock exchange.

The tax rate for other listed companies barring the tobacco and telecom companies may also be reduced to 25 per cent from the existing 27.5 per cent in FY 2015-16.

Sources said corporate tax for cigarette companies may be also rationalised in the upcoming FY.

The income tax rate for cigarette companies, both listed and non-listed, may be set at 45 per cent.

The move has been taken to rationalise the corporate tax rates after the government decided to gradually cut the rates.

The corporate tax rate is one of the highest in Bangladesh compared to that of the tax rates of other neighbouring countries.

The corporate tax rates in Bangladesh now range between 27.5 per cent and 45 per cent.

The tax rate for non-listed companies has been reduced to 35 per cent from 37.5 per cent in the budget for FY 2014-15.

In the recent budget, neighbouring India has cut the corporate tax rates down to 30 per cent and has promised to lower it to 25 per cent in four years' time.

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