Re-introduction of depreciation benefit for leasing cos sought

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FE Report
Bangladesh Leasing and Finance Companies Association (BLFCA) Thursday sought re-introduction of depreciation benefit for leasing companies to salvage the industry.
In the budget for fiscal 2007-08, the government scrapped the depreciation allowance for the leasing industry, which was introduced in 1985.
The depreciation on leased assets aims at reducing the amount of corporate tax and raising profitability of a leasing company.
"We propose that the leasing companies have strong case for depreciation allowance, which the government should kindly allow by amending the income tax ordinance, 1984 and resorting the previous position and save the industry from possible collapse," said BLFCA chairman Mafizuddin Sarker in a pre-budget meeting with the National Board of Revenue (NBR) Thursday.
He also said the financial institution (FIs) that opened subsidiary companies have to pay tax twice. The BLFCA has proposed the NBR to avoid such double taxation in the next budget.
The NBR held the pre-budget meeting with leasing, finance and insurance association in its conference room. VAT and Customs administration head Farid Uddin chaired the session.
Responding to the proposal, first secretary of income tax policy Abdul Latif said the NBR will seriously consider granting depreciation allowance to leasing companies as they have a valid ground.
BLFCA has proposed that dividend received from subsidiary or associated companies be exempted from further tax as they have paid tax once on its income.
The BLFCA chairman has also proposed to cut corporate tax rates for FIs to 35 per cent from existing 42.5 per cent.
"…It is not practical to keep the banks and FIs in the same tax bracket since a major part of the revenue of a bank comes from earnings like L/C commission, commission on guarantees, remittances, substantial exchange income etc, which a FI can not earn," the BLFCA proposal said.
The association has proposed that income derived from all subscriptions irrespective of status of subscribers should be entitled to have tax exemption to encourage the development of bond market in the country.
Currently, the government allows tax exemption for zero coupon bond subscribed by anybody (individual, partnership, private and public limited company excepting FIs and leasing companies.
Bangladesh Insurance Association (BIA) has placed five specific proposals for inclusion in the next budget for fiscal 2010-2011.
It has proposed to impose less tax on insurance than that of banks. It has sought the government to consider tax rates of listed companies for insurance companies.