Businesses of the country have long been demanding corporate tax to be reduced. The rate of corporate tax is 32 per cent for companies not listed in the stock market and 25 per cent for companies listed in stock market. Currently, corporate tax is 45 per cent for mobile operators as well as cigarette and tobacco product manufacturing companies; 37 per cent for banks listed in the stock market and 40 per cent for banks not listed in stock market. Usually, tax rate for the company listed in stock market is considered as corporate tax and there are 1,000 companies listed in stock market. About 35,000 companies pay tax at various rates.
Corporate tax is higher in Bangladesh than neighbouring India and Pakistan and even than South East Asian countries including Vietnam, Thailand and Malaysia. Rate of corporate tax is 15-30 per cent in India whereas most of the companies in Bangladesh pay tax at a rate of more than 30 per cent. Rate of tax for banks is 35 per cent in Pakistan – a five per cent up from the tax banks are paying in Bangladesh. Others companies in Pakistan pay at a rate of 29 per cent and small companies pay at 22 per cent. The average rate of tax is 20 per cent in Vietnam.
According to sources at NBR, corporate tax may decrease by 2.5 per cent for in two categories of companies namely listed and in stock market in the next budget. No change likely for other companies including banks, mobile operators and cigarette companies.
One of major demands placed by businesses is withdrawal of minimum tax on turnover irrespective of profit and loss. Currently, a company with an annual turnover of over 30 million (3 crore) must pay a five per cent tax on its transactions. The rate is one and two per cent for cigarette companies and mobile operators respectively. New company face more problems for imposing such tax. Sources at NBR said businesses are unlikely to get any good news on it in the upcoming budget.
Sales are not good since the beginning of coronavirus pandemic, but traders can’t spend adequately on marketing their products. There is no tax on the spending of up to five per cent of the company’s transactions for publicity and marketing. Business demand increasing this limit. They claimed five per cent to 10 per cent of transactions is spent for marketing. If sales grow, tax will increase as well. Sources at NBR said up to one per cent of total transactions spent for publicity and marketing may be made tax free.