Businesses unhappy as Muhith leaves corporate tax largely unchanged

The Dhaka Chamber of Commerce and Industry or DCCI has said it would be difficult for Bangladesh to boost private sector investment unless the corporate tax was cut down.

“The government has set a target to increase the private sector investment-to-GDP ratio to 25.15 percent which will be challenging if the corporate tax rate is not cut down,” DCCI President Abul Kasem Khan said in a statement on Thursday.

His reactions came shortly after Finance Minister AMA Muhith unveiled the budget for fiscal 2018-19 in parliament.

Muhith proposed to reduce corporate tax for publicly listed banks, non-banks and insurance companies by 2.5 percentage points, but left other rates unchanged.

“Currently, the private sector investment to GDP ratio is 23 percent. If we want to increase it by 1 percentage point, we need to invest Tk 250 billion a year,” Khan said.

The DCC praised a slew of decisions, including reducing duty on imports of accessories for locally produced motorcycles, mobile phones and tyre tubes.

It also lauded an allocation of Tk 1 billion for skills development. He said the tax rebate should be given over 5 percent of a company’s gross income which is invested in research and skills development.

In a statement, Md Abdul Kader Khan, president of Bangladesh Garments Accessories and Packaging Manufacturers and Exporters Association, said: “I hope a proper implementation of the proposed budget will help achieve the GDP target of 7.8 percent in FY2019.”

“The existing 35 percent corporate tax is burdensome for the garment accessories makers, which will discourage new investments,” he said.

“For the sake of the industry and new employment generation, we earnestly urged the government to bring down corporate tax rate to 15 percent as offered for the readymade garment sector.”