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8 June, 2018 00:00 00 AM
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Surcharge on owners of 2 vehicles or 8,000sft house

Staff Reporter

The proposed budget for the next fiscal year is going to impose a surcharge on individuals who own two cars and property over 8,000 square feet in city corporation areas. Finance minister AMA Muhith recommended the policy during his presentation of the national budget  FY2018-19 in Parliament yesterday. “I propose some small reforms by imposing a surcharge on individuals who own two motor cars or house property with an aggregate area of 8,000 square feet in a city corporation area,” he said. “A surcharge on individual taxpayers plays an effective role in controlling the risk of increasing income and wealth inequality in society that arises from the economic development of the country,” the minister added.

Muhith also proposed a minimum surcharge of Tk. 3,000 for individuals with a net wealth greater than Tk. 2.25 million and a minimum surcharge of Tk. 5,000 for individuals with a net wealth exceeding Tk. 100 million.

However, the finance minister did not change the general tax exemption threshold of Tk 2.5 lakh from last year. He also did not change the existing tax rates of 25 per cent for publicly traded companies and 35 per cent for non-publicly traded companies.

Clarifying the reason for the unchanged exemption rate, Muhith said an increase in the tax exemption threshold puts a significant number of taxpayers out of the tax net.

“In developed countries, the tax exemption threshold is generally less than 25 per cent of per capita GDP. In developing countries, it is mostly equal to per capita GDP. In Bangladesh, the tax exemption threshold is almost 200 per cent of per capita GDP. That means our tax exemption threshold is high in comparison to global norms,” he said.

“Moreover, the increase of tax exemption threshold puts a significant number of taxpayers out of the tax net. Considering all these, I propose that the tax exemption threshold and tax rate remain unchanged for the next year except that the threshold for a parent or guardian of a person with disability will be higher by Tk. 50,000 for each of such a child or dependent,” he added.

In the face of demand for reducing corporate tax further, Muhith said: “It is often argued that the corporate tax rate in Bangladesh is high. This is not correct. Corporate tax for publicly traded companies in Bangladesh is 25 per cent—it’s lower than many countries in South Asia and very compatible with the global average (24.29 per cent).”

The finance minister had good news for listed banks and other financial institutions as the budget proposed to reduce their tax rate by 2.5 percentage points to 37.5 per cent.

“We will lose a certain amount of tax revenue from such a rationalisation of the corporate tax rate. However, this will give a positive signal to our investors,” said Muhith.

With this proposed rate, the highest corporate tax rate will be mostly 40 per cent and the next highest rate will be 37.5 per cent, except for tobacco manufacturers and non-listed mobile phone

operators.

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Editor : M. Shamsur Rahman

Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

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