Gratuitous corporate tax relief ahead

A slew of tax benefits may be declared three months ahead of the national budget for fiscal year 2024-25 under an urgency felt for easing burden on select corporate taxpayers.

Educational institutions, asset-management companies, and leather- and leather-goods exporters would enjoy this tax relief, as per an offer list that has received law ministry's vetting.

The National Board of Revenue (NBR) would issue three separate Statutory Regulatory Orders (SROs) for the taxpayers to receive the tax sops, officials said.

"Of the taxpayers, any recognised universities, colleges or research organisations would enjoy tax breaks on research grants received from any foreign donors until 2026-2027," a draft SRO reads.

As per the Income Tax Law 2023, research organisations are supposed to pay corporate tax at a rate of 27.5 per cent while universities 15 per cent on the grants.

However, the organisations will have to obtain tax-exemption certificates from the NBR to avail the facility.

For leather-and leather-goods exporters, the NBR would cut source tax to 0.50 per cent from existing 1.0 per cent with validity until June 30, 2025.

Another SRO would be issued for asset-management companies by slashing their tax rates to 15 per cent from 27.5 per cent on the income derived from fees of mutual-fund management. The tax sop would be valid until the tax year 2026-27.

Asset-management companies had enjoyed the pared-down tax for a decade until that expired on June 30, 2023, said a senior tax official.

"The income-tax wing will reinstate the tax benefit for them," he said.

For research organisations and universities, the tax official said, some grants have been allocated by foreign companies for research purpose which banks held up for higher taxes as per tax law.

The NBR would expedite issuance of SRO to help in releasing the funds, he said.

Professor Mustafizur Rahman, Distinguished Fellow of the Centre for Policy Dialogue (CPD), welcomes such step for tax relief for academics, as research comes under focus from all quarters for quality improvement of education in Bangladesh.

"Research organisations are nonprofit entities and their allocation for research shrinks with the tax cut," he says.

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