Corporate tax to come down

Corporate tax paid by banks, insurance and financial institutions listed on stock exchanges is coming down in the news fiscal year beginning on July 1.

Finance Minister AMA Muhith proposed to cut the tax while presenting his Tk 3 trillion national budget for 2015-16 in Parliament on Thursday.

Business groups have been strongly lobbying for a cut in the corporate tax.

The minister suggested the current tax rate for these organisations be reduced from 42.50 percent to 40 percent.

Merchant banks, however, will not enjoy the reduced tax.

But 42.50 percent tax will still apply for the banks, insurance and financial institutions not listed on the bourses.

Muhith has also proposed corporate tax reduction for other publicly listed institutions, from 27.50 percent to 25 percent.

Analysts say the finance minister is trying to bring some cheer to the industry to drive up investments after two years of political turmoil dampened business sentiments.

The present corporate tax rate for the country’s banks, insurance and financial institutions is 42.50 percent. And the rate is 45 percent for mobile phone service providers.

However, they get a 5 percent rebate if they are enlisted on the capital market.

Cigarette manufacturing companies, too, are subjected to a 45 percent tax, and their existing rebate of 5 percent for being listed on the stock market has been removed.

Enlisted companies have to pay a 27.50 percent tax, but if in the event of declaring less than 20 percent dividends, they have to pay tax at an enhanced rate of 37.50 percent.