Listed companies are to pay 27.5 percent corporate tax instead of existing 30 percent.
The finance adviser yesterday also proposed to reduce corporate tax on non-listed companies from 40 percent to 37.5 percent.
“The 45 percent tax for banks, insurance, financial institutions and mobile phone operators will, however, remain unchanged,” the finance adviser said.
“For corporate tax-payers, I propose to impose income tax on dividend income in accordance with the applicable scheduled rates for companies instead of existing 15 percent,” he said, adding that currently, according to Section 16CC of the Income Tax Ordinance, all companies, irrespective of profit earning or loss making, have to pay a minimum tax on the basis of their turnover which is clearly in breach of the fundamental principles of Income Tax.
“I propose to rescind this Section,” Mirza Aziz said.
Stock market operators said although corporate tax cut was proposed for both listed and non-listed companies, in general the proposal will encourage the private companies to get listed on the stock exchanges.
“The revised corporate tax structure will encourage the companies, especially those in the industrial sector, to be listed on the stock market,” said Salahuddin Ahmed Khan, chief executive officer of Dhaka Stock Exchange.
During his budget speech, the finance adviser also said the government has started the process of off-loading the shares of a number of state owned enterprises (SoEs) from the energy, telecommunication and industrial sectors in the capital market.
“It is expected that this initiative would positively contribute to employment generation and industrialisation,” he said.
Mirza Aziz also said decision has also been taken to off-load government shares of nine SoEs in the power sector, 10 SoEs in the industrial sector and two enterprises in the telecommunication sector.
“Government has also taken steps to introduce Book Building System in the capital market to attract private companies having strong financial foundation,” he added.