Rethink on NBR step likely

Doulot Akter Mala | Published: August 07, 2014 00:00:00 | Updated: November 30, 2024 06:01:00

The government is likely to rethink the budgetary measure that provides for imposition of 25 per cent tax on annual incomes of state-run regulatory entities from the current fiscal year, as the step stirred up discontent.
Finance Minister AMA Muhith recently asked the National Board of Revenue (NBR) to reconsider the matter of tax collection from the regulatory bodies.
The directive came following a recent plea of Bangladesh Securities and Exchange Commission (SEC) not to tax the stock-market watchdog.
In the budget for the current fiscal year (FY), the government incorporated a provision on collection of corporate tax at the rate of 25 per cent from the state-owned entities.
Some of the regulatory authorities are BSEC, Bangladesh Telecommunications Regulatory Commission (BTRC), Bangladesh Road Transport Authority (BRTA), Bangladesh Export Processing Zones Authority (BEPZA) and Insurance Development and Regulatory Authority (IDRA).
Tax officials said incomes of the state-owned entities were always taxable-they did never enjoy full exemption. According to the Income Tax Ordinance, the entities had been under the purview of paying 37.5 per cent corporate tax until the FY 2013-14.
A recent letter, signed by the BSEC chairman, said the regulatory body had not been a taxable entity until the FY 2013-14.
"The commission is depositing a major part of the Beneficiary Owner (BO) account fees with the public exchequer," the commission pointed out in the letter.
During the period from the FYs 2010-11 to 2013-14, the BSEC paid Tk 1.94 billion in revenue, not in the form of NBR-tax, to the government by collecting BO account fees from the stock market.
The stock-market regulator urged the government not to tax its income so that it could implement the development plan to make stock-market investors aware about the nitty-gritty of share trading.
Earlier, the BTRC also had demanded withdrawal of the tax on it, claiming itself to be a non-profit entity.
A senior tax official said the income-tax-policy wing received the instructions of the finance minister to review the rules of tax collection from the regulators.
The wing is yet to start work on this matter.
Tax officials said some of the state-owned entities were reluctant about payment of taxes while some obtained special permission from the NBR to pay tax at a reduced rate of 25 per cent until the last fiscal year.
With the provision laid down in the Finance Act 2014, the state-owned entities that were enjoying full exemption from payment of income tax under their respective laws will have to pay it from the FY 2014-15.
The government has streamlined the tax rate by clarifying the income tax law in the budget.
A Statutory Regulatory Order (SRO) of the NBR has listed names of some 29 local authorities for collection of corporate tax at the rate of 25 per cent on their annual incomes.