The government is likely to raise corporate tax for cooperative societies in Bangladesh from the existing 15 per cent to 20 per cent in FY2024-25, denoting a possible 5 per cent increase.
This move aims to reduce tax barriers among different companies, say finance ministry officials involved in the matter. Industry insiders however say such a move may hurt cooperative society-based socio-economic rural development programmes across the country.
According to the Department of Cooperatives, there are currently around 1.88 lakh cooperative societies working for the country’s socio-economic development, and the number of people involved with different programmes is around 1.22 crore.
These societies are playing a pivotal role in rural economic development, poverty alleviation and significant employment generation, according to the department’s latest annual report.
Besides, the VAT exemption period for air conditioner manufacturers will end in June this year, and there is no plan at the moment to extend the deadline. VAT is being levied at the air conditioner manufacturing stage in the next FY.
In this case, the VAT on air conditioners may be 5 per cent to 10 per cent. Apart from this, the VAT rate may increase from 5 per cent to 10 per cent at the refrigerator manufacturing stage.
Sponsor directors of listed companies may see a tax hike too on capital gain. There is currently a 5 per cent tax, and it may jump to 15 per cent.
15% unified for 15 products
The government plans to raise VAT to 15 per cent on LED bulbs [1 WATT to 50 WATT] from the existing 5 per cent, for tube lights [18 WATT to 36 WATT] from 5 per cent, and for mango juice, tamarind juice, guava juice, pineapple juice and mango bar from 5 per cent.
The VAT for cigarette’s rolling paper may be raised from 7.5 per cent to 15 per cent, similarly for amusement and theme parks tickets from 7.5 per cent, for customers of bidding products from 7 per cent, for security service from 10 per cent, and contractor service from 10 per cent.
Besides, supplementary duty (SD) on carbonated beverages may be raised to 45 per cent from the existing 25 per cent. Besides, supplementary duty and prices of all tiers of cigarettes will be raised in the upcoming fiscal year.
There has been so far no example of increasing SDs at four tiers in a single FY. VAT may be imposed from the existing Tk 200 to Tk 300 on each mobile SIM card or e-SIM.
Higher tax on income from govt univs’ deposits
The government plans to propose a higher source tax on government universities’ income, whether it is profit or usury derived from saving deposit, fixed deposit or term deposit or any other deposits.
In that case, source tax may rise to 20 per cent, from the existing 10 per cent. Besides, primary schools may be subject to 10 per cent source tax on such incomes.
Besides, the government may reduce the tax on the income generated by provident, gratuity and other pension funds to 10 per cent, from the existing 15 per cent.
Source tax cuts on essential commodity supply
In a bid to rein in high inflation and keep markets stable, the government is planning to reduce source tax on at least 30 essential commodities and supplies of food grains. Under the initiative, source tax may be reduced to 1 per cent from the existing 2 per cent in the next FY.
The essential commodities are onion, garlic, peas, chickpeas, rice, wheat, potatoes, lentils, edible oil, sugar, ginger, turmeric, dry chillies, maize, flour, salt, pepper, cardamom, cinnamon, cloves, dates, bay leaf, jute, cotton, yarn, all kinds of fruits to make these commodities more affordable for consumers than the existing elevated price.
