Concerns have grown among businesspeople over the country’s corporate tax rate.
Most of the business organisations have urged the National Board of Revenue (NBR) to reduce the tax rate. According to them, reducing the corporate tax rate will facilitate businesses and increase investments.
Apparel entrepreneurs said that if the corporate tax rate is increased in this sector, it would subsequently raise manufacturing costs and harm their businesses. They fear it would also adversely affect the country’s export earnings.
Ready-made garment (RMG) leaders demanded that the rate remain the same for the sector during the NBR’s pre-budget discussions held recently.
According to BGMEA sources, the current corporate tax rate for export-oriented RMG industries is set at 12 per cent, and 10 per cent for factories with LEED certification, which will remain in effect until June 30, 2028.
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) leaders argue that increasing the tax rate in this prominent sector would undermine the confidence of both local and foreign entrepreneurs.
Meanwhile, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) support the current corporate tax rate.
Bangladesh’s corporate tax rate is higher than that of most other countries, said Bangladesh Chamber of Industries (BCI) officials at the NBR’s pre-budget discussion. Noting that higher tax rates discourage investments, the officials proposed reducing the tax rate to 25 per cent for private companies and 20 per cent for publicly traded companies without any conditions.
They hope for increased investments if this proposal is accepted.
The Metropolitan Chamber of Commerce and Industry (MCCI) called for a realistic reduction in the corporate tax rate. It said the effective tax rate in this country is high, often rising to 40 to 50 per cent depending on the sector.
According to MCCI President Kamran T. Rahman, although the rate has been reduced by 2.5 per cent in recent years, medium and large enterprises still fail to benefit due to compliance requirements.
At the discussion, the Dhaka Chamber of Commerce and Industry (DCCI) leaders called for initiating an automated system for corporate bodies to submit tax returns. They noted that corporate companies still submit tax returns manually — which is time-consuming and prone to errors.
According to the research organisation Center for Policy Dialogue, nine per cent of organisations in the country pay corporate tax. In other countries, this tax contributes significantly to national revenue. In Bangladesh, corporate tax generated 15 per cent of the revenue from the fiscal year (FY) 2000–01 to FY11. In FY15, the tax accounted for 25 per cent of national revenue.
However, during the coronavirus pandemic, this amount dropped to 18 per cent. In the current fiscal year, corporate tax has reached 20 per cent.
Translated & edited by Fariha Nowshin Chinika
