NBR estimates revenue loss at Tk 25 billion

Doulot Akter Mala | Published: June 19, 2018 22:28:44

The revenue authorities have estimated Tk 25 billion losses in corporate tax collection in the upcoming fiscal year (FY) provided the budgetary proposal made in this connection comes into force from July.
The finance minister, in his budget speech on June 07, proposed reducing corporate tax rate for all banks, financial institutions and insurance companies by 2.5 percentage points.
The Large Taxpayers' Unit (LTU) under the income tax wing of the National Board of Revenue (NBR) estimated the aggregate losses due to the reduction in corporate tax rates.
However, the private think- tank Centre for Policy Dialogue (CPD), in its post-budget press conference, estimated that the proposed tax cut is likely to result in an annual revenue loss of Tk 10 billion to the government.
The Finance Minister, AMA Muhith, proposed bringing down the corporate tax rates for both publicly-traded and non-publicly traded banks, insurance and financial institutions.
The corporate tax rate for publicly-traded banks, insurance and FIs has been proposed to be 37.5 per cent from the existing 40 per cent.
Banks, insurance and FIs approved by the government in 2013 will also be able to enjoy 37.5 per cent corporate tax rates.
Non-listed banks, insurance and FIs will pay 40 per cent corporate tax from the existing 42.5 per cent.
There are some 30 publicly-traded banks out of 57 across the country.
Apart from the 30 banks, nine non-listed banks will enjoy 37.5 per cent corporate tax rates in the next fiscal.
The non-listed banks were approved by the government in 2013.
Talking to the FE, a senior official of LTU said around 60 per cent of the revenue of the unit comes from the banks.
Banks pay tax in advance as per income tax ordinance-1984.
Banks pay tax in four instalments in all quarters of a fiscal year.
Anis A Khan, a former chairman of the Association of Bankers, Bangladesh (ABB), said the proposed cut would help the banks raise their capital base.
The government will have to widen its net to offset the losses of corporate tax rather than focusing on only large taxpayers, he said.
"Effective tax rates of banks usually go up to 44 to 45 per cent due to the disallowance of expenditure by the taxmen," he added.
The high rate of corporate tax discourages investors, he added.
According to official data, the LTU collected Tk 104.40 billion taxes in the first three quarters (Q3) of the current fiscal.
This means a 15.04 per cent growth over the same period of the last year.
The target of the LTU income tax wing has been set Tk 182 billion for FY 2017-18, projecting 31.65 per cent growth over the corresponding period.
The LTU official said it is now gearing up efforts to realise blocked revenues.
Some Tk 50 billion revenues of LTU remain stuck with pending court cases.
Of the amount, Tk 30 billion is lying with the cases on disputes with the country's mobile phone companies on SIM subsidies.
Cellphone companies claimed SIM (Subscribers' Identity Module) subsidies as tax-free income.
However, the taxmen termed it taxable considering it a promotional activity of the companies, officials said.
The LTU official said that the unit also started the process of realise the amount through mutual discussion with the companies.
doulot_akter@yahoo.com