New banks, insurers, NBFIs to pay tax at lower rate

Parliament (Jatiya Sangsad) passed Monday the Finance Bill 2015 with amendments that include cuts in the proposed higher tax at source on exports, corporate tax, VAT on private universities and supplementary duty on internet uses.
Finance Minister AMA Muhith came up with the changes in the proposed fiscal measures for 2015-16 in compliance with the 'requests' made by Prime Minister Sheikh Hasina in the House before the bill was put to voice vote.
The finance minister in the Finance Bill had proposed to levy 1.0 per cent tax at source on all exports, including readymade apparels, which now stands slashed down at 0.6 percent.
The apparel exporters paid tax at source on their export proceeds at a rate of 0.3 percent in the outgoing financial year (FY) 2014-15. And the proposed hike had created outcry in the country's main export sector.      
Corporate tax for new banks and non-banking financial institutions (NBFIs), insurance companies, approved by the government in 2013, has been lowered to 40 per cent from the existing rate of 42.5 per cent.
Supplementary duty (SD) on use of internet through SIM and RIM has been reduced to 3.0 per cent from 5.0 per cent.
The at-source tax on export earnings has been lowered to 0.60 per cent from 1.0 per cent proposed for the fiscal 2015-16.
Currently, apparel exporters pay 0.30 per cent tax on export bills while other exporters pay 0.60 per cent.
After commencement of the new fiscal year on July 1, 2015, all exporters have to pay it at a uniform rate of 0.60 per cent.
Minimum tax for individual taxpayers in Dhaka and Chittagong City Corporation areas has been fixed at Tk 5,000 while in other city corporations Tk 4,000 and taxpayers living outside cities have to pay Tk 3,000.
Private universities, medical and engineering collages have to pay 7.5 per cent Value Added Tax from the upcoming FY. In the budget speech, the finance minister had proposed to slap 10 per cent VAT on the private universities and colleges.
Currently, 7.5 percent VAT is levied on English-medium schools, while private universities, medical colleges and engineering colleges are enjoying full exemption.
E-commerce service has also been exempted from payment of Value Added Tax (VAT).
In the budget speech, the finance minister proposed to impose 4.0 per cent VAT on online trading.
The government also backtracked on its move to bring Ayurvedic, herbal and Yunani medicines under VAT net.
Tax benefit for fish-farms owners through rate cut has been reintroduced for FY2015-16. Tax-free income ceiling for poultry and fisheries farms has been fixed at Tk 2.0 million.
The government also withdrew all taxes on import of raw materials for cancer medications, hepatitis-C preventives and raw materials for herbal medicine.  
Import tax on Horlicks has been knocked down to 10 per cent from proposed 25 per cent.
Mandatory submission of Taxpayer's Identification Number (TIN) for the English-medium-school guardians outside city corporations and pouroshovas has been relaxed.
Supplementary duty on four-stroke complete motorcycle has been hiked to 60 per cent from proposed 45 per cent.
The Jatiya Sangsad passed the finance bill by voice vote to give legal cover to the fiscal measures proposed by the government in the new budget worth over Tk 2.95 trillion.           
Meanwhile, the parliament is expected to pass today (Tuesday) the Appropriations Bill 2015 granting the government right to raise and spend the budgetary funds in the next fiscal.
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