Doulot Akter Mala Corporate tax collection is likely to face a blow in the current fiscal year (FY) 2013-14 due to possible poor showing by the country's major private commercial banks (PCBs) and other large companies. The ongoing political uncertainty centering the upcoming general election, in all probability, will leave an adverse impact on business growth of large companies, bankers and taxmen have expressed the fear. In the first quarter of the current fiscal, the Large Taxpayers Unit (LTU) under the income tax wing of the National Board of Revenue (NBR) missed its target by Tk 1.37 billion, though it achieved a 22 per cent growth, in terms of revenue, over the corresponding period. In the July-September period, the LTU collected an aggregate amount of Tk 23.87 billion against its target of Tk 22.50 billion. In the corresponding period of FY 2012-13, the unit collected Tk 18.45 billion tax from the large taxpayers. The LTU has a target of collecting Tk 36.04 billion in the second quarter (October-December) of the current fiscal. Its total target for the FY'14 has been set at Tk 151.75 billion, representing a 30 per cent growth over that of the previous fiscal. Last year, the wing collected Tk 117.05 billion income tax. The unit's 65 per cent tax comes from the banks, which pay 42.5 per cent tax on their profit. Besides, the country's largest telecom company - Grameenphone - contributes a significant amount to the LTU's revenue earning. Tax officials said the country's major commercial banks need to perform better to help the NBR achieve its tax collection target from corporate taxpayers. The International Monetary Fund (IMF) Sunday expressed the fear that unrest and political uncertainty, centering the upcoming election, would affect the country's economic activities. It projected GDP growth below 6.0 per cent for the current fiscal, against the government's projection at 7.2 per cent. Mohammad Masoom, deputy managing director of Mercantile Bank Limited, said overall demand for credit has been declining following sluggishness in the country's investment scenario. "Investors are adopting a wait-and-see approach amid the present stagnant political situation. They are not willing to take any risk." He said the banks' performance is unlikely improve in the short-term. Many bank clients are becoming loan defaulters due to the prevailing situation in the industrial sector. A number of loan scams and residual risks have also forced the banks to be cautious in loan disbursement, Mr Masoom said. Another banker said decline in banks' profit does not affect the income tax collection much, as the amount used to provision classified loans is not exempted from tax. "Banks have to pay tax on their respective provisioned amount. They have to pay the high rate of tax despite incurring loss," he added. Tax officials said the government expects 30 per cent growth in revenue collection of the LTU, while the number of corporate taxpayers reduced after introduction of the LTU in Chittagong. Through budgetary measures, the wing will be able to collect 10 per cent more tax from two companies. In the budget for FY 2013-14 the government has withdrawn the tax rebate benefit earlier granted to the Grameenphone and the British American Tobacco on account of their listing on the bourses.
Poor showing by banks likely to hit tax collection in FY '14
FE Team | Published: October 09, 2013 00:00:00 | Updated: February 01, 2018 00:00:00
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