NBR plans to cut corporate tax

The National Board of Revenue plans to cut corporate tax from the next fiscal year as the existing rate is too high for firms, its Chairman Md Ghulam Hussain said yesterday.
The tax administrator said the rate, which now ranges from 37.5 percent to 45 percent, will be reduced in phases to bring it on par with the rate of individual income tax, now maximum 25 percent.
"Individual income tax is always higher than corporate tax in many countries that follow equity based taxation principles," Hussain said at a press briefing at NBR headquarters in Dhaka.
Though corporate tax has been very high in Bangladesh for many years, policymakers never moved to cut the rate fearing a fall in revenue collection, he added.
Hussain said Prime Minister Sheikh Hasina has recently given her consent to bringing down the rate and Finance Minister AMA Muhith also asked the revenue board to work on the matter.
However, the NBR chairman did not make it clear how much the cuts would be. He said the reduction would increase tax compliance.
As businesses have long been demanding a cut in corporate tax, the NBR revealed the plan ahead of its discussions with trade bodies and other stakeholders by the end of this month to prepare the national budget for the next fiscal year.
"We are trying to frame a pro-poor taxation system following a progressive taxation approach. Wealthy people will pay higher tax and the less wealthy will pay less," Hussain said.
"We will try to give a framework on this in the next budget."
In the next fiscal year, the NBR also plans to reduce the number of items that entail supplementary duties, and hike taxes for the products that are harmful for health and environment, he said.
The NBR chairman said many raw tobacco processing units are operating in the country, but these items face nominal tax and the collection is also very low.
"This sub-sector (jorda or chewing tobacco) remains almost ignored. We plan to impose higher taxes on these products," he said.
"We are exploring scope to impose a new kind of tax on items that pose health risk such as tobacco or tobacco products. The tax to be collected from these products will go for the treatment of heart and cancer patients," he said.
The tax administrator also aims to bring amendment to the customs and income tax laws in the upcoming fiscal year.
Hussain said the NBR will focus on integrated automation to reduce taxpayer's hassles, provide speedy services and ensure transparency.
He also said they would be able to achieve the revised revenue collection target for the current fiscal year.
The government has recently revised down the NBR's revenue collection target by 8 percent to Tk 125,000 crore from Tk 136,090 crore set at the beginning of the fiscal year.
The revision came following slow revenue collection due to prolonged political unrest and sluggish economic activities in the past few months.
Hussain said the revenue shortfall from the target amounted to Tk 4,000 crore in the first seven months of the current fiscal year.
"But the economy is bouncing back now. So we believe we can attain the revised revenue collection target," Hussain said.