Bangladesh keeps corporate tax rates unchanged for FY24 to achieve growth target

The government reduced the rates in the three previous budgets to encourage investments amid the pandemic and the Ukraine war

The government has kept corporate taxes unchanged for the 2023-24 fiscal year to achieve an “ambitious” 7.5 per cent GDP growth after cutting the rates in the previous three budgets.

Finance Minister AHM Mustafa Kamal proposed no changes to the rates in the budget for the upcoming financial year on Thursday, with plans to mobilise Tk 5.04 trillion from revenue earnings in FY24, a 15 per cent increase from FY23.

To achieve the revenue target, and increase tax-GDP ratio following advice from the International Monetary Fund and economists, the government has relied heavily on indirect taxes.

“From FY2020-2021 to FY2022-23, the corporate tax rate has been reduced every year. Considering all these, as a part of efforts to achieve tax GDP growth targets I am proposing to retain the existing structure of corporate tax rate,” Mustafa Kamal said in his budget speech.

For the current fiscal year, he had announced a corporate tax cut in order to reinvigorate the economy after the setbacks caused by the pandemic and the war in Ukraine.

Bangladesh previously cut the corporate tax rate by 2.5 percentage points for One Person Company in each of the two previous fiscal years, lowering it from 35 percent to 30 percent.

Now it is 27.5 percent for companies not listed on the share market. The rate for listed companies is 22.5 percent.

The existing corporate tax rates range from 15 per cent to 47 per cent.

The rate is 45 percent for mobile phone companies not listed on the market. Tobacco firms pay 47.5 per cent corporate tax, including 2.5 per cent surcharge. It is 40 per cent for unlisted insurers and financial institutions.

Merchant banks, banks, insurance firms and financial institutions’ corporate tax is 37 per cent. If they are listed, the rate is 40 per cent.

For private universities, private medical, dental, engineering colleges and IT institutions, the rate is 15 per cent.