However, corporate tax for other sectors will remain unchanged like last year
Non-listed entities are going to get a 2.5% corporate tax cut in the budget for the 2021-22 fiscal year, according to sources at the Ministry of Finance and the National Board of Revenue (NBR).
However, corporate tax for other sectors will remain unchanged like last year, the sources added.
Experts said that the decision is expected to increase investment in the private sector of the country, but it might discourage firms from listing with the stock market.
Business people welcomed the decision, saying a tax cut during the pandemic would help industries survive.
International Business Forum of Bangladesh (IBFB) Vice President and Chairman of Newton Group Lutfunnisa Saudia Khan told Dhaka Tribune that this move is appreciated amid the pandemic.
If the trend of decreasing corporate taxes continues, the economy will gain leverage, she added.
“As business remains difficult due to complex bureaucratic systems, for increased ease of business, we need coordination and government support,” Khan further said.
Monowar Hossain, vice president of the Dhaka Chamber of Commerce and Industry (DCCI), said this move will help boost the confidence of business people.
“For a long time, we were asking for this. Not only that, but also those who want to make new investments will be encouraged to invest more. It would also motivate foreign investment,” he added.
Mahtab Uddin, a lecturer at the Dhaka University Department of Economics and a research economist at South Asian Network on Economic Modeling (SANEM), said that the relaxation is commendable, as it will benefit the business sector if the tax system becomes more friendly.
Corporations often deal with indirect transactions due to the complex tax process; by updating the income tax law, it can be made business-friendly, he added.
Other than financial institutions, the corporate tax rate is 25% for publicly listed companies and 35% for non-listed firms.
A publicly listed bank or a non-bank financial institution (NBFI) must pay 37.5% corporate tax — which is 40% for non-listed banks.
For publicly listed mobile companies, the tax rate is 40%, while it is 45% for non-publicly listed mobile network operators.
Apart from this, companies in the ready-made garment sector have to pay corporate taxes at the rate of 10% and 12% and cooperatives at the rate of 15%.