IMF suggests large cut in corporate tax
Wednesday, 26 December 2007
Shakhawat Hossain
The International Monetary Fund (IMF) has suggested a 5.0 per cent increase in the top individual taxpayers' tax rate. Such taxpayers are now paying 25 per cent tax on their income.
The fund made the suggestion as the caretaker government (CG) sought cooperation from the Washington-based multilateral donor agency to execute some immediate reform programmes in the National Board of Revenue (NBR).
The IMF has also suggested substantial cut in the corporate tax and elimination of tax incentives such as tax holiday.
It is imperative for the revenue board, according to the sources, to take some immediate action plans to increase the income tax collection as the government is pursuing a policy to reduce dependence on the customs department.
Income from the customs department has been fixed at nearly 38 per cent of the NBR's total target of Tk 438.50 billion (43,850 crore) in the current fiscal.
The contribution from the income tax department has been fixed at 24.72 per cent.
In the last fiscal, the contributions from the income tax and custom departments were fixed at 21 per cent and 42 per cent respectively.
Sources said the NBR is looking into the recommendations although there is no specific deal between the government and the IMF as the CG opted not to strike any deal with the IMF until the next general election.
According to NBR officials, income taxes from individual taxpayers have been collected under the existing four slabs-10 per cent, 15 per cent, 20 per cent and 25 per cent.
The IMF suggested a change in the top slab of tax rate--25 per cent--while retaining the other rates so that the revenue board can mobilise a substantial amount of income tax without major changes.
Of the country's 0.75 million (7.5 lakh) taxpayers, a big portion of the annual income tax comes from the taxpayers whose income is more than Tk 350,000 mark.
These taxpayers, known as large taxpayers, are being dealt with by the large taxpayers' units which were set up in 2003 in line with the suggestion of the IMF.
The number of such large taxpayers will be not more than 300.
The revenue board charges 20 per cent tax on income of Tk 350,000, 15 per cent on income of Tk 300,000 and 10 per cent on income of Tk 250,000.
The rates have been being maintained since July 2006.
The International Monetary Fund (IMF) has suggested a 5.0 per cent increase in the top individual taxpayers' tax rate. Such taxpayers are now paying 25 per cent tax on their income.
The fund made the suggestion as the caretaker government (CG) sought cooperation from the Washington-based multilateral donor agency to execute some immediate reform programmes in the National Board of Revenue (NBR).
The IMF has also suggested substantial cut in the corporate tax and elimination of tax incentives such as tax holiday.
It is imperative for the revenue board, according to the sources, to take some immediate action plans to increase the income tax collection as the government is pursuing a policy to reduce dependence on the customs department.
Income from the customs department has been fixed at nearly 38 per cent of the NBR's total target of Tk 438.50 billion (43,850 crore) in the current fiscal.
The contribution from the income tax department has been fixed at 24.72 per cent.
In the last fiscal, the contributions from the income tax and custom departments were fixed at 21 per cent and 42 per cent respectively.
Sources said the NBR is looking into the recommendations although there is no specific deal between the government and the IMF as the CG opted not to strike any deal with the IMF until the next general election.
According to NBR officials, income taxes from individual taxpayers have been collected under the existing four slabs-10 per cent, 15 per cent, 20 per cent and 25 per cent.
The IMF suggested a change in the top slab of tax rate--25 per cent--while retaining the other rates so that the revenue board can mobilise a substantial amount of income tax without major changes.
Of the country's 0.75 million (7.5 lakh) taxpayers, a big portion of the annual income tax comes from the taxpayers whose income is more than Tk 350,000 mark.
These taxpayers, known as large taxpayers, are being dealt with by the large taxpayers' units which were set up in 2003 in line with the suggestion of the IMF.
The number of such large taxpayers will be not more than 300.
The revenue board charges 20 per cent tax on income of Tk 350,000, 15 per cent on income of Tk 300,000 and 10 per cent on income of Tk 250,000.
The rates have been being maintained since July 2006.