A clarification

There were a few factual errors in the second of a three-part article under the heading, 'Widening the  tax net', written by Dr. Ayubur Rahman Bhuyan and published in The Financial Express (FE) in its issue on June 02, 2014. He mentioned the existing corporate tax rate in Bangladesh at 27.5 per cent. A good number of readers of the FE informed this paper that the corporate tax rate in Bangladesh varied between 27.5 per cent and 45 per cent, depending on the sectors and nature of the companies. For private companies, the rate is 37.5 per cent. The listed banking and non-banking financial institutions have to pay corporate tax rate at 42.5 per cent. For the companies in sectors like telecom and tobacco, the rate is even higher -- at 45 per cent.
Like the case in India, the corporate tax rate in Bangladesh has a segregated character, the concerned readers noted while pointing out that the corporate tax rate that Prof. Ayubur Rahman mentioned at 27.5 per cent is applicable for some publicly traded companies. This rate, as they noted, covers only a limited number of companies that are listed with the stock exchanges and quite a good number of such companies report low levels of profits and declare also low dividends. The concerned readers also pointed out that the corporate tax rate for the listed companies also varies, on grounds of their dividend pay-outs.
The FE cross-checked the issue with a number of tax lawyers and chartered accountants' firms who corroborated the readers' feedback, as noted above.
The corporate tax rate in Bangladesh, considering the sources from which the lion's share of its earnings comes, is the highest among the South Asian countries. Such tax rate in India is 30 per cent for domestic companies and 40 per cent for the foreign-owned ones. There are also some variations in application of such corporate tax in India. For life insurance companies, the corporate tax rate there, to cite an example, is 12.5 per cent. There are strong demands from the businesses in India to lower its corporate tax rate and the new Modi government is inclined towards acceding to such demands to encourage investments, domestic as well as foreign.
In Pakistan, the corporate tax rate is 34 per cent for non-banking companies and 35 per cent for banking companies.
In Sri Lanka, the average corporate tax rate is 28 per cent. In Afghanistan, the rate is 20 per cent on an average. In Bhutan, the corporate tax rate is 30 per cent. In Nepal, the rate is 25 per cent for general companies, firms and industries, 30 per cent for banks and financial institutions and 20 per cent for special industries.
Based on such facts, the analysis, which reflected Dr. Ayubur Rahman's personal views about corporate tax rate and investment activities, has created some misunderstanding among the readers of the FE. Those views do not necessarily reflect its editorial stance on the matter.