The Bangladesh government plans to reduce corporate income tax by 2.5 percentage points to encourage cashless transactions. Finance Minister Abul Hassan Mahmood Ali proposed lowering the corporate tax for non-listed companies from 27.5% to 25%, contingent on conducting transactions over Tk5 lakh and annual expenses over Tk36 lakh through bank transfers. The proposal was presented in the FY25 budget at the parliament on Thursday.
For listed companies that offload at least 10% of shares in the stock market and meet the bank transfer condition, the corporate tax rate would decrease from 22.5% to 20%. Companies offloading less than 10% would face a 25% tax rate, but this could reduce to 22.5% if they comply with the bank transfer requirement.
The minister also suggested a tax cut for one-person companies from 22.5% to 20%, under similar conditions. Additionally, he proposed increasing the tax rate for cooperative societies from 15% to 20% to support the country’s tax-GDP growth target.
Sector insiders expressed concerns that the reduced tax disparity between listed and non-listed companies might negatively impact the capital market by diminishing the incentive to become listed. They recommended increasing the tax disparity to boost revenue collection. Despite the unchanged tax rate for listed companies, there are worries about potential negative effects on them due to hidden aspects of the proposal.
