Finance Minister AHM Mustafa Kamal has proposed to keep tax exemption threshold for individual taxpayers and corporate tax rates for fiscal 2019-20.
While rolling out the Tk 5.23 trillion budget for the next fiscal in parliament on Thursday (Jun 13), he said that tax-free income limit has been at Tk 250,000 for the last few years. The ceiling has been Tk 300,000 for female taxpayers.
The tax exemption threshold of income in developed nations is generally less than 25 percent of per capita income, he said adding some even do not have any threshold limit while in developing countries, it is mostly equal to or below per capita income.
“In Bangladesh, the tax exemption threshold is almost 1.5 times above the per capita income. Moreover, any increase in the tax exemption threshold will push a significant number of taxpayers out of the tax net, which will eventually erode the tax base,” reads his budget speech.
Corporate tax
Finance Minister Kamal said that multiple corporate tax rates are in existence for different corporate sectors.
Listed companies in Bangladesh pay 25 percent corporate tax while the non-listed ones 35 percent.
“Besides, a good number of corporate sectors are enjoying reduced tax rates and tax exemptions. When these facts are taken into consideration, we find the effective corporate tax rate in Bangladesh is below 5 percent,” reads Kamal’s budget speech.
He noted that the tax for banks and financial institutions was cut down by 2.5 percent in last year, which caused a significant drop in revenue collection from the financial sector.
“Considering the facts, I propose to continue with the existing corporate tax rate structure for the next year,” the finance minister said before proposing to raise minimum tax for mobile phone companies to 2 percent of their turnover from the existing 0.75 percent.