According to the proposed budget, the corporation tax rate for listed companies will be decreased to 20% from 22.5%, for non-listed companies to 27.5% from 30 % and for one-person businesses to 22.5 % from 25 %
The corporate tax rate has been decreased from 32.5 percent to 30 percent as part of the Finance Act 2021, in order to facilitate rapid expansion of trade and commerce. During the presentation of the budget to parliament, Finance Minister AHM Mustafa Kamal said, would want to propose a further lowering of the existing corporate tax rates in FY 2022-2023.
Also, to help formalize the economy and encourage the formation of One Person Companies (OPCs), I suggest lowering the tax rate on OPCs from 25% to 22.5 percent. For the sake of developing the stock market and encouraging investment, I suggest that a listed business that transfers more than 10% of its paid-up capital through an Initial Public Offering pay a tax rate of 20% instead of the current 22.5 percent (IPO).
However, I suggest that a listed firm that transfers ten percent or less of its paid-up capital through an IPO pay a tax rate of 22.5 percent. However, if the corporation fails to meet the above indicated standards, the tax rate would be 25 percent instead of 22.5 percent.
We always applaud business tax reduction, it will give us an edge over our competitor countries, Dhaka Chamber of Commerce and Industry President Rizwan Rahman told The Business Standard on May 23 when reached.
The private sector has been lobbying for lower corporate tax rates for several years, he said, because it would face additional tariffs after the LDCs graduate in 2026.
If we do not make the necessary measures now, firms will be burdened even more, he warned. More foreign direct investment will be attracted to Bangladesh as a result of another 2.5 percentage point reduction in corporate taxes. In this sense, he said, the growing dollar price will also play a role.
He noted that the cost of doing business and ease of doing business have remained important challenges for Bangladesh, and that FDI should account for at least 5% of GDP.
Proposed Tax Rate for Businesses and Other Entities
For fiscal years 2022-2023, the corporate tax rate will be applicable to all taxpayers except individuals.
Description | Existing 2021-2022 | Proposed 2022-2023 | In the event that the criterion is not met |
A publicly traded firm that uses an Initial Public Offering to raise more than 10% of its paid-up capital. | 22.5% | 20.0% | 22.5% |
A publicly listed firm that raises more than or less than ten percent of its paid-up capital through an initial public offering (IPO). | 22.5% | 22.5% | 25% |
Company that is not listed on the stock exchange | 30.0% | 27.5% | 30% |
A one-person business | 25.0% | 22.5% | 25% |
Bank that is publicly traded | 37.5% | 37.5% | Condition not applicable |
Bank that is not publicly traded | 40.0% | 40.0% | Condition not applicable |
Company that is not listed on the stock exchange | 30.0% | 27.5% | 30.0% |
The government has recommended a 2.5 percent reduction in the corporate tax rate for listed and non-listed firms, compared to current rates, on the condition that the companies transact any expenditure or investment above Tk12 lakh or any other amount through banks.