The Financial Express

BMBA for reduction of corporate tax

Mohammad Mufazzal | Published: April 08, 2020 09:50:00 | Updated: April 12, 2020 09:32:45

BMBA for reduction of corporate tax

Bangladesh Merchant Bankers Association (BMBA) has prepared a set of budget proposals including more reduction of corporate tax for listed companies.

The BMBA sent their budget proposals, made for the fiscal year 2020-21, to the chairman of National Board of Revenue (NBR) at the end of March.

Presently, the listed companies, other than banks, insurers, financial institutions, telecom and tobacco companies, pay 25 per cent corporate tax.

The merchant bankers have proposed to reduce the corporate tax to 20 per cent from the existing 25 per cent.

"More non-listed companies will be inspired to go public if the amount of corporate tax is reduced. The government's revenues will be increased at this," the BMBA said.

The BMBA has also proposed to reduce VAT of listed companies by 5.0 per cent.

Presently, the listed and non-listed companies pay VAT at an ideal rate of 15 per cent. The amount of VAT varies in accordance with the nature of products.

The market operators such as brokerage firms and merchant banks pay 0.05 per cent tax at source on the commission realised through transactions of listed securities.

In their proposal, the merchant bankers urged the government to reduce the tax at source to 0.015 per cent on the commission realised by merchant banks and brokerage firms.

"The country's capital market is teetering for a long time. Under such a situation, the tax at source on the commission realised from the transactions of listed securities should be reduced," the BMBA said in its proposal.

The proposal said the companies distribute dividend after deducting corporate tax. Advance tax is deducted at a rate of 10 per cent to 15 per cent during disbursement of dividends.

Later, stipulated amount of tax becomes applicable when the dividend receivers submit tax returns.

"In this case, advance tax should be considered as final tax. Investors will be inspired about long term investments if the taxation on dividend is simplified," the BMBA proposal said.

Presently, merchant banks pay 37.50 per cent corporate tax, brokers 35 per cent and asset management companies 15 per cent.

"The corporate tax of merchant banks should be reduced to 25 per cent from existing 37.50 per cent. A balanced corporate tax should be applicable for all market operators," the merchant bankers said.

The merchant bankers also proposed to allow un-disclosed money in the capital market imposing 7.50 per cent tax.

"There should be a condition of keeping un-disclosed money in the capital market for three years. This facility will leave a positive impact on the mainstream economy," the BMBA proposed.

Meanwhile, Chittagong Stock Exchange (CSE) submitted a set of budget proposals including reduction of tax at source on the brokerage commission.


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