Bangladesh – 2015-16 budget cuts corporate tax rates

Bangladesh – 2015-16 budget cuts corporate tax rates

In June 2015, the Finance Minister’s 2015-16 budget, presented to Parliament in June 2015, is the second budget of the second term of the Awami League Government. At 38 billion US dollars (USD), the budget would increase government spending by 23 percent over last year and is about 17 percent of the country’s GDP. About 60 percent of this outlay will be met from tax revenue, along with a mere 2 percent from foreign grants.

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The government projects GDP growth of 7 percent, which exceeds the annual growth of just over 6 percent seen for most of last decade. The budget’s inflation target is 6.2 percent. 

Notable changes corporate tax in the budget are as follows: 

  • After many years, the corporate tax rate for banks, insurance companies and non-banking financial institutions was reduced to 40 percent (from 42.5 percent). 
  • The tax rate for cigarette manufacturers (companies and others) was increased to 45 percent (from 40 percent), regardless of whether they are listed. 
  • The main tax rate for other listed companies is reduced to 25 percent (from 27.5 percent). 
  • The controversial turnover-based minimum tax was reduced to 0.10 percent (from 0.30 percent) of turnover for first three years, but only for industrial undertakings. 
  • Automobile, bicycle and tyre manufacturing companies are now eligible for tax holiday. 
  • Severe penalties were introduced for businesses employing foreign nationals without the necessary permission/approval from relevant government authorities. 
 
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