Companies using banking channels for all transactions to get lower tax rates

The incentive will apply to both listed and non-listed companies, while the government has also proposed tax relief on dividends and zero-coupon bonds

The government has proposed cutting corporate tax rates by 2.5 percentage points for companies that conduct all their transactions through banking channels, responding to longstanding calls from the business community for lower corporate taxes.

Finance and Planning Minister Amir Khosru Mahmud Chowdhury announced the proposal during his closing speech at the budget session in parliament on Monday.

The sitting began in the morning with Speaker Hafiz Uddin Ahmad presiding.

Opposition leader Shafiqur Rahman took part in the budget discussion before Leader of the House Tarique Rahman addressed parliament.

Presenting the proposal as part of efforts to make the capital market more sustainable, the finance minister said: “I propose an additional 2.5 percent tax benefit for any listed or non-listed company that completes all its transactions through banking channels.

“As a result, listed companies that conduct cashless transactions and have offloaded at least 10 percent of their shares on the stock market will enjoy a corporate tax rate 7.5 percentage points lower than that of non-listed companies.”

The proposed budget for FY2026-27 had initially offered the 2.5 percentage-point tax cut only to listed companies meeting the banking transaction requirement.

The new proposal extends the benefit to non-listed companies as well.

At present, corporate taxpayers face different tax rates depending on their sector.

Under the Income Tax Act, companies currently pay a standard tax rate of 27.5 percent, which will fall to 25 percent if they meet the banking transaction condition.

Listed companies that have floated more than 10 percent of their paid-up capital through an IPO will continue to pay 22.5 percent tax, or 20 percent if they fulfil the condition.

For listed companies that have not floated more than 10 percent of their paid-up capital through an IPO, the corporate tax rate remains 27.5 percent, falling to 25 percent upon meeting the condition, as proposed in the budget.

More Tax Changes

The finance minister said: “To ensure the sustainable development of the capital market, I am proposing a package of amendments to the Finance Bill, including making income from zero-coupon bonds tax-free.”

Although the proposed budget did not mention the issue, the amendment would reverse taxation on zero-coupon bond income that has been in place for the past 15 years.

He also proposed a 2.5 percentage-point corporate tax cut for companies that become listed on the stock market after transferring any amount of shares.

The minister added, “I propose reducing the tax rate on dividends for corporate taxpayers to 20 percent, lowering the tax rate on dividends for individual taxpayers to 15 percent, and removing the Tk 500,000 investment ceiling for tax rebates on investments in mutual funds.”

He said the government was encouraging strong companies to enter the capital market to provide long-term financing for industrialisation and investment.

“We are already seeing investor confidence return to the capital market, as reflected in the rise of the market index. The reform process in this sector will continue.”