NBR sight set on Tk 3.0b addl tax from tobacco cos

Newly-imposed tax at source and withdrawal of tax benefit for listed cigarette companies would help the National Board of Revenue (NBR) to coup with the losses from cut in corporate tax for the listed and new commercial banks, non-banking financial institutions (NBFIs) and insurance companies.  
The NBR's Income Tax Wing is eyeing to mobilise additional Tk 3.0 billion corporate taxes in the current fiscal year (FY), 2015-16, with the imposition of 3.0 per cent advance income tax (AIT) on cigarette companies and scrapping of the tax-benefit for the listed ones in the capital market.
Officials said the additional revenue would offset the losses that the tax authority will have to incur due to cut in corporate tax for the listed and new commercial banks, NBFIs and insurance companies by 2.5 per cent.   
The tax authority has estimated the loss to the tune of Tk 3.0 billion due to lowering of corporate tax to 40 per cent from 42.5 per cent for the banks in the FY 2015-16.
Officials said the government slapped 3.0 per cent source tax on maximum retail price (MRP) of cigarette brands in the budget to maintain uninterrupted tax collection flow of the Large Taxpayers Unit (LTU).
In the budget, the government also slapped a uniform rate of 45 per cent tax on both listed and non-listed cigarette companies.
Until FY 15, tax rate for the listed cigarette companies was 40 per cent, while the non-listed ones used to pay 45 per cent.
Three cigarette companies are currently holding 97 per cent of market share in the country. British American Tobacco Bangladesh (BATB) Company Limited, Sheikh Akij Uddin Ltd (Dhaka Tobacco) and Abul Khair Tobacco Ltd are the major players of cigarette market in Bangladesh.
In FY 15, gross turnover of BATB was Tk 109 billion, while shown income Tk 9.0 billion and paid tax Tk 3.63 billion, according to tax returns of the company.
However, the payable source tax would be less for BATB on the basis of income in 2014-15, compared to that of the paid tax through tax returns last year. But withdrawal of tax benefit as listed company would help taxmen collect additional revenue from the company.
For withdrawal of tax benefit for the listed companies, BATB will have to pay Tk 4.08 billion tax in FY 15 on the basis of its income, taxmen estimate.
Dhaka Tobacco paid Tk 119 million tax last year against Tk 280 million disclosed income and Tk 43.94 billion gross turnover.
The Income Tax Wing now eyes Tk 1.31 billion as source tax from the company.
Some Tk 545 million tax at source would be collected from Abul Khair Tobacco Limited according to the new measures.
Last year, the company's gross profit was Tk 18.17 billion, while shown income Tk 26 million and paid tax Tk 11 million.
Tax officials said the at-source tax collection will be readjusted with the actual payable tax at the year-end with the tax returns.
They said the alleged concealment of net income would be checked with the imposition of at-source tax on the companies.
Sources concerned said mainly the two local companies would come under close scrutiny over the at-source tax.
There are allegations over non-payment of actual payable tax by some of the cigarette companies, they added.
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