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Corporate tax rates to remain unchanged

Staff Correspondent
01 Jun 2023 15:35:35 | Update: 01 Jun 2023 18:27:35
Corporate tax rates to remain unchanged
— Representational Photo

The government wants to keep the corporate tax rates unchanged for all sectors in the fiscal year 2023–24, Finance Minister AHM Mustafa Kamal said in his budget speech on Thursday.

“Considering all these, as a part of efforts to achieve tax GDP growth targets, I am proposing to retain the existing structure of the corporate tax rate for FY 2023–24 applicable for taxpayers other than individuals,” he said.

There are several corporate tax rates currently in effect in Bangladesh, he said.

Based on the compliance with the terms of transactions that all income, expenditure, and investment of taxpayers must be transacted through a formal channel, the current tax rates of non-listed companies, artificial personalities created by law that are not otherwise defined, and other taxable entities vary from 30 per cent to 27.5 per cent, the minister said.

Currently, the corporate tax rate for listed companies is 20 per cent while it is 27.5 per cent for non-listed ones. These rates are not applicable to banks, insurance companies, non-bank financial institutions (NBFIs), telecommunication companies, and tobacco firms.

The tax rate for listed banks, insurance companies, and NBFIs is 37.5 per cent while it is 40 per cent for non-listed firms in the same categories.

Also, to facilitate the formalisation of the economy and incentivise the formation of one-person companies (OPCs), the current tax rate for non-listed companies for OPCs varies from 25 per cent to 22.5 per cent.

The current tax rate is 20 per cent for listed companies that issue shares worth more than 10 per cent of their paid-up capital through an initial public offering (IPO) and 22.5 per cent for companies that issue shares worth 10 per cent or less of their paid-up capital through an IPO.

But in this case, the tax rate would be 22.5 per cent instead of 20  per cent and 25 per cent instead of 22.5 per cent for applicable listed companies if the companies fail to comply with the conditions that all expenses, investments, receipts, and income, except fixed annual cash expenditure and investment, must be made through bank transfer.

From FY21 to FY23, the corporate tax rate was reduced every year.

Earlier, stock market stakeholders urged for a 15 per cent gap in corporate tax between listed and non-listed companies in the FY24 budget to attract healthier firms to the bourses.

The rate of corporate tax in Bangladesh is higher than the Asian average of 21 per cent and the global average of 24 per cent, according to KPMG, a global network of professional firms providing audit, tax, and advisory services.

Bangladesh’s tax rates for companies are also higher than those of Vietnam, Thailand, Malaysia, China, Indonesia, Sri Lanka, and Pakistan. Vietnam and Thailand charge 20 per cent tax for companies while the rate is 24 per cent in Malaysia and 25 per cent in Indonesia.

India’s basic corporate tax rate stands at 30 per cent, but the effective rate goes up to 35 per cent for domestic companies after adding the surcharge and education fees.