Listed and non-listed and one-person companies have come under the purview of the new tax cuts from FY2022-23.
According to the proposed budget, corporate tax rate has been reduced to 20% from 22.5% for listed companies, 27.5% from 30% for non-listed companies and 22.5% from 25% for one-person companies.
"With a view to facilitating rapid expansion of trade and commerce, the corporate tax rate has been reduced from 32.5% to 30% through Finance Act 2021. In FY 2022-2023, I would like to propose a further reduction of the existing corporate tax rates," Finance Minister AHM Mustafa Kamal said while placing the budget at the parliament.
He further said, "In this case, all receipts and income must be received through bank transfer and all expenditures and investments in excess of Tk 12 lacs must be made through bank transfer. Here, I propose to reduce the tax rate for non-listed company from 30% to 27.5%. Also, to facilitate formalization of the economy and to incentivize formation of One Person Company (OPC), I propose to reduce the rate of tax for OPCs from 25% to 22.5%. For the sake of development of the stock market and attracting investment, I propose a tax rate of 20% in place of existing 22.5% for a listed company that transfers more than 10% of its paid-up capital through Initial Public Offering (IPO). I, however, propose the tax rate to be 22.5% for a listed company that transfers ten percent or less than ten percent of its paid-up capital through IPO. But in this case, the tax rate would be 25% instead of 22.5% if the company fails to comply with the conditions mentioned earlier."
Earlier on 23 May, when contacted Dhaka Chamber of commerce and industry President Rizwan Rahman told The Business Standard, "We always appreciate corporate tax reduction, it will give us an edge over our competitor countries."
The private sector has been demanding cuts in corporate tax rates for the last few years as some additional tariff will be imposed on it after the LDC graduation in 2026, he said.
"If we do not take necessary preparations right now, it will put more burdens on businesses," he noted.
The corporate tax cut of another 2.5 percentage points will draw in more foreign direct investment into Bangladesh. The rising dollar price will also come into play in this regard, he said.
Mentioning that cost of doing business and ease of doing business have remained as major concerns for Bangladesh, he pointed out that FDI in the country should be a minimum 5% of GDP.