The government is planning to increase the income tax from 25 percent to 30 percent from high income earners in the next financial year.
To encourage compliance and increase tax collection, the government may reduce corporate tax in the next fiscal year 2024-25, finance ministry officials said.
They also said that the National Board of Revenue (NBR) will propose to reduce corporate profit tax by two and a half percentage points for listed and unlisted companies.
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The government currently collects 27.5 percent of the registered annual income of nine unlisted companies as tax.
Listed companies that float more than 10 percent of their paid-up capital through initial public offerings are subject to a 20 percent tax on their income.
On the other hand, the income tax is 22.5% for listed companies which issue shares at a price of less than 10% of the paid-up capital.
The penalty rate is increased by two and a half percentage points for all three types of establishments that fail to comply with the regulations.
However, the NBR is considering whether to reduce the income tax of unlisted companies to 25 percent, said an unnamed Finance Ministry official.
“We are considering tax cuts to encourage compliance and gradually move towards cashless transactions,” he told The Daily Star.
He declined to comment on possible tax cuts for listed companies.
While presenting the budget for the current financial year, then Finance Minister AHM Mustafa Kamal said, ‘Corporate tax has been reduced every year from 2020-21 to 2022-23.’
In the financial year 2021-22, the corporate tax rate of non-listed companies has been reduced from 32.5 percent to 30 percent and the tax rate for listed companies has been reduced from 25 percent to 22.5 percent.
The government is planning to increase the income tax from 25 percent to 30 percent from high income earners in the next financial year.
Finance Ministry officials say that tax rates will return to pre-pandemic levels if approved in the budget to be tabled in Parliament next June.
They said that the revenue authority is planning to increase the tax rate on people with higher income to prevent income inequality in the country.
NBR currently collects income tax in five systems.
The tax rate on the tax-free income limit up to Tk 3.5 lakh is 5 percent on income up to Tk 4.5 lakh, 10 percent on income up to Tk 7.5 lakh, 15 percent on income up to Tk 11.5 lakh, on income up to Tk 16.5 lakh. 20 percent and 25 percent on income above 16 lakh rupees.
Tags: Government reduce corporate tax
