Covid-19: Govt mulls corporate tax cuts

The government is contemplating trimming corporate tax rates for banks and other industries to offer them a leeway to mitigate losses amid an outbreak of coronavirus, said a finance ministry official on Wednesday.  

Finance Minister AHM Mustafa Kamal on Monday asked the Bangladesh Bank, the National Board of Revenue, and the Financial Institution Division of his ministry to do the paperwork to this end, The Business Post has learned.

The cut in corporate tax will be effective for May and June of the current fiscal and the entire period of 2020-21 fiscal year, the official added.

Bangladesh has some eight-tiers of corporate tax -- one of the highest in South Asia -- where rates start from 25 per cent for the listed companies; the rate goes up to 45 per cent for cigarette manufacturers.

Corporate tax for non-listed companies is 35 per cent and higher rates are slapped on banks, financial institutions, and mobile phone operators.

In another development, the finance division has decided to provide subsidies on the interest of the banks' outstanding until December 2020, as the local industries have severely been affected by the pandemic during the last couple of months. 

The decision to pay subsidies on the interest followed a directive from Prime Minister Sheikh Hasina that she gave recently.

However, the banks will not be allowed to claim interest subsidies against the default loans, said sources in the finance ministry.

"The finance ministry is now estimating the size of the fund that the government would require for subsidising the accumulated interest," confirmed a highly placed source at the ministry.

/sk/at/teb