The government is all set to curtail corporate income tax by 2.5 percentage points in a bid to encourage compliance with a condition of promoting cashless transactions.
Finance Minister Abul Hassan Mahmood Ali today proposed the 25 percent corporate tax to replace the existing 27.5 percent for non-listed companies, subject to one condition.
Ali made the proposal while placing the proposed budget for FY25 at Jatiya Sangsad Bhaban today.
The condition is that all types of income, receipts, single transactions of over Taka 5 lakh and all annual expenses and investments exceeding Taka 36 lakh be done through bank transfers.
Similarly, the minister proposed that listed companies which offloaded at least 10 percent of shares in the stock market and abided by the bank transfer condition be able to avail an income tax reduction from 22.5 percent to 20 percent.
If the share offloading is less than 10 percent, the company has to pay income tax at a rate of 25 percent.
However, if this company abides by the bank transfer condition, the income tax rate will be 22.5 percent.
"In order to further formalise the economy and encourage the establishment of one-person companies, I propose to make the one-person company tax rate from 22.5 percent to 20 percent, subject to compliance with the same conditions as non-listed companies," added the finance minister.
Tax free income ceiling remains at Tk 3.5 lakh
The government has retained the tax-free income limit at Taka 3.5 lakh for individual taxpayers for the fiscal year (FY25).
"I propose to keep the tax-free income thresholds of natural individual taxpayers and firms unchanged for the financial year (FY) 2024-25," said Finance Minister AH Mahmood Ali while placing the budget for the next fiscal year (FY25) at Jatiya Sangsad (JS) Bhaban.
At the same time, it is proposed to increase the existing maximum tax rate from 25 percent to 30 percent for natural individual taxpayers and firms with tax slab adjustments.
According to today's budget proposal, for women and senior citizens aged 65 years or above, the limit is Taka four lakh, physically challenged persons and members of the third gender Taka 4.75 lakh and the freedom fighters Taka five lakh.
However, the threshold would be increased for parents or legal guardians of physically challenged/adopted child by Taka 50,000 for each child.
Mahmood Ali said the maximum tax free income threshold for individual taxpayers was Taka 1.65 lakh in FY 2009-10, which has been increased to Taka 3.50 lakh in FY2023-24 in a phased manner.
He said the tax-free income threshold is higher for women, senior citizens, physically challenged persons, members of the third gender and war wounded freedom fighters. "This has brought back some comfort in the life of ordinary taxpayers due to reduction in tax burden and encouraged tax payers to pay taxes regularly," he added.
Ali also proposed to retain the proposed tax rate for 2024-25 for the assessment year 2025-26 to facilitate the expansion of trade, improve investor confidence in the country's tax system and encourage local and foreign investment, thereby introducing a prospective tax system in Bangladesh. "I believe that through a prospective tax system, taxpayers can do proper tax planning and help increase tax compliance," the finance minister said.
He also proposed to keep the existing structure of minimum tax unchanged.
At present, the minimum tax applicable to taxpayers other than company taxpayers in Dhaka North, Dhaka South and Chattogram City Corporation is Taka 5,000. For other City Corporations, it is Taka 4,000. For other areas outside the City Corporation, minimum tax is Taka 3,000.
Ali also proposed to keep the existing structure of surcharge unchanged.
Surcharge is collected from wealthy individual taxpayers at certain percentage of the income tax based on their net wealth.
Currently, the rate of surcharge payable up to the net asset value of Taka four crore is nil. If the net asset value exceeds Taka four crore, the surcharge is 10 percent and if the net asset value exceeds the maximum limit of Taka 50 crore, the surcharge amount is 35 percent.
