MFIs urge govt to review proposed 10pc tax on their net income

FE Report | Published: June 02, 2014 00:00:00 | Updated: November 30, 2026 06:01:00

Country's microfinance operators urged the government Sunday to review the decision on imposing 10 per cent tax on net income of microfinance institutions (MFIs).
They also said the proposed tax would largely obstruct the government poverty reduction and development strategy.
"The proposed tax will hinder the microfinance activities and the borrowers would be its main victims as the impact would be multifold," Chairman of Credit and Development Forum (CDF), a networking organisation of the lenders, M Mosharraf Hossain said at a press conference at the National Press Club auditorium in the city.
The CDF, Federation of NGOs in Bangladesh (FNB) and International Network of Alternative Financial Institutions (INAFI) jointly organised the press conference.
Senior Director (Strategy, Communications and Capacity) of Brac Asif Saleh, executive vice president of ASA Faizur Rahman, CDF vice president Emranul Haque Chowdhury, Executive Director of INAFI, Atiq-un-Nabi, Tajul Islam from FNB and Md Abdul Awal from CDF were present at the press conference, among others.
He listed eight reasons why the government should shun such kind of move.
Mr Hossain said the proposed tax would increase the fund crisis for the microfinance which would also decrease the credit flow in the poverty reduction sector.
"It will destroy the sustainability of microfinance sector and would halt the expansion of government development programme," Mr Hossain said.
He said the lenders do not receive any profit from the microfinance as they usually refinance it.
Sources said the National Board of Revenue (NBR) took a move in 2005 to impose the 10 per cent tax, but later shelved the plan in the face of opposition from different quarters, including micro finance operators.
There are 700 MFIs in the country now. According to the Microcredit Regulatory Authority (MRA), in the microfinance sector, the total outstanding loan is around Tk 248 billion and savings Tk 168 billion. The total clients of this sector is 35 million that accelerates overall economic development process of the country.
Quoting Moody's analysis, Mr Hossain said microfinance has established a critical social safety net that offsets the vagaries of a subsistence level percapita income.