The government is set to continue tax benefit on dividend declaration for the publicly listed companies in the upcoming fiscal year (FY), sources concerned said.
In the Finance Bill-2014, the government proposed to scrap existing tax rebate at a rate of 10 per cent, on declaration of dividend above 20 per cent, for the listed companies in the stock exchanges.
Sources said the government has backtracked from its proposed measure on withdrawal of tax rebate facility for the listed companies after it found the measure would create inconsistencies and discourage companies to offer dividend.
Listed companies might have to declare 40 per cent dividend, instead of existing 20 per cent, for enjoying 10 per cent tax rebate in the upcoming FY, they added.
Currently, listed companies are paying corporate tax at a rate of 27.5 per cent on their annual income while non-listed ones at 37.5 per cent.
In the proposed Finance Bill, the government has cut tax rate for non-listed companies by 2.5 per cent to 35 per cent.
According to the proposed budget for FY 2014-15, publicly traded companies will have to pay corporate tax at a rate of 35 per cent, like non-publicly traded companies, if they declare dividend below 10 per cent.
Tariff and Taxation sub-committee Chairman of the Metropolitan Chamber of Commerce and Industry (MCCI) Adeeb H Khan said the government has kept the penalty unchanged for not declaring divided but has withdrawn the facility of tax rebate for the listed companies.
He said there should be a benefit for declaring higher dividend by companies.
Responding to a query on possibility to set 40 per cent dividend rate, he said financial health of most of the companies is not that much well to declare the high dividend.
Among the other major changes in the Finance Bill-2014, ceiling for tax-free limit on dividend income from the share market might be raised to Tk 20,000 from the proposed Tk 15,000 in the Finance Bill.
However, capital gain tax on individual share-holders, at 3.0 per cent on realised gains above Tk 1.0 million to Tk 2.0 million and five per cent above Tk 2.0 million, is likely to remain unchanged.
In the Finance Bill, the government would exclude cost and management accountants from providing audited account statement in individual tax files. Only chartered accountants would be empowered to give the audited statements to the taxpayers.
The amendments of proposed tax measures have been approved at a meeting with the Finance Minister Sunday.
Officials said further revision of tax measures might take place at the instruction of the Prime Minister.
In the amendments, the government would incorporate industries in 'Barisal Division' in tax holiday facility that was not mistakenly mentioned in the Finance Bill.
Rice bran oil producing industries and Cineplex would enjoy tax holiday facility until 2019, according to the amended bill.
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