Corporate tax collection takes a tumble in H1

Government's corporate tax collection took a tumble in the first half (H1) of the current fiscal year (FY) as the telecommunications sector threw a damper on high expectations.
Officials said the large taxpayers unit (LTU) under the income tax wing of the revenue board received Tk 2.31 billion less than the amount collected during the corresponding period in the previous year from the mobile-phone operators.
Aggregate collection of direct tax by the National Board of Revenue (NBR) faced a shortfall against its target due to negative growth in corporate-tax collection from mobile-phone operators in the July-December period.
The wing collected Tk 6.67 billion from the phone operators in H1 against Tk 8.98 billion in the corresponding period.
Tax collection from Grameenphone Ltd faced a Tk 1.19 billion shortfall in H1 against the previous collection.
Grameenphone paid Tk 6.48 billion in tax in the July-December period against Tk 7.67 billion in the corresponding period last year, an industry source said.
Robi Axiata Ltd paid Tk 190 million in H1 against Tk 1.32 billion in the matching period, he said.
Banking sector is the largest source of country's corporate tax collection followed by mobile-phone operators, leasing and investment companies, tobacco manufacturing, merchant banking, life insurance, pharmaceuticals and general insurance.
The LTU missed its ambitious half-year target although the corporate-tax collection from the banking sector increased by Tk 9.66 billion.
The unit got Tk 31.95 billion from the banking sector in the H1.
"Cuts in corporate tax for banks and financial institutions and withdrawal of upfront tax are the main reasons for slowdown in corporate-tax collection," said one official.
In the current budget, the government has lowered corporate tax by 2.5 per cent for banks and FIs which are the main sources of tax-revenue collection for LTU.
Officials said the LTU lost Tk 10.0 billion worth of tax due to cutbacks on taxes for banks and FIs and withdrawal of upfront tax.
The corporate-tax collection by the LTU posted a poor 5.0 per cent growth in the H1. Last year, the unit netted Tk 57.75 billion in income tax from both individual and corporate taxpayers.
The NBR has set a Tk 78.78 billion target for the LTU in the current FY, 2015-16, missing its target by Tk 16.38 billion. Of the target, the wing collected Tk 62.40 billion in the July-December period. The wing collected around 32 per cent of its total targeted amount in H1.
Usually, the LTU collects 40 per cent of its corporate tax in the first half of the FY while the rest 60 per cent comes in the second half, officials said.
Among the other major corporate taxpayers, Islami Bank, the Hong Kong and Shanghai Banking Corporation (HSBC), Dutch-Bangla Bank, United Commercial Bank, Pubali Bank, AB Bank, Eastern Bank, Mercantile Bank, Al-Arafah Islami Bank, Exim Bank, IFIC Bank, One Bank, Standard Bank, Mutual Trust Bank, Uttara Bank, and IDLC Finance Ltd paid less amounts of tax in H1 than that of the same period last year.
However, Standard Chartered, British American Tobacco Bangladesh Company Ltd, Southeast Bank, Bank Asia, the City Bank Ltd, Square Pharmaceuticals Ltd, Trust Bank, Dhaka Bank, Brac Bank, National Bank, Social Islami Bank, American Life Insurance Co Ltd, First Security Bank, and Commercial Bank of Ceylon Ltd paid higher amounts in H1.
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