Some relief for income taxpayers

The proposed budget relieves income taxpayers a little with restructured thresholds for different income slabs. 

Thus, the tax burden in fiscal 2015-16 will be a little lighter for many, but might end up somewhat regressive in implementation, said Aminur Rahman, a former member of the National Board of Revenue.

Besides, people who are not covered by the income tax exemption threshold will have to pay at least Tk 4,000 in taxes. In the outgoing fiscal year, the tax was Tk 3,000 for taxpayers living in the city corporations, Tk 2,000 for district level municipalities and Tk 1,000 for taxpayers at rural areas.

“I think it is regressive as it will affect the marginal taxpayers,” he said.

The proposed budget has cut corporate taxes for the listed companies. But the highest individual tax rate, which is 30 percent, should not be higher than corporate taxes, Rahman said. 

The suggested tax for listed corporates stands at 25 percent, down from the current 27.5 percent.

As of now there are 131,000 companies in Bangladesh, according to the Office of the Registrar of Joint Stock Companies and Firms. Of them, 281 are listed.

If financial institutions like banks, non-banks and insurances are excluded, the number of companies that stand to gain from the cut comes down to just 150.

“There is no need to give them this privilege,” the NBR member said.

Rahman also said the budget has proposed to bring cooperatives under the income tax net. “But I don't think the government will be able to earn anything from them.”

In the new budget, the tax-free threshold for interest on dividends earned from the stockmarket has also been raised to Tk 25,000 from Tk 20,000.

From the next fiscal year, all government staff will have to bear taxes on various benefits just like they do on basic salaries. 

The budget also proposes withdrawal of the 5 percent interest on interest incomes from wage earner bonds.

The at-source tax has been made uniform for all exporters at 1 percent. Till now garment exporters have paid 0.30 percent tax at source while other exporters paid 0.60 percent.

However, Rahman doubted whether the government would be able to earn more from income taxes than value added taxes, as Bangladesh has always collected more VAT compared to incomes taxes.

The proposed budget also intends to make companies, like financial institutions and insurance companies, maintain accounts using the July to June calendar year. The decision will come into effect from 2016-2017.