Stocks
Budget 2024-25: Corporate Tax Slashed to 25% for Non-Listed Firms
In the proposed budget for the fiscal year 2024-25, Finance Minister Abul Hasan Mahmood Ali announced a reduction in the corporate tax rate for non-listed companies by 2.5%. This move aims to stimulate growth and compliance among privately-held firms by lowering their tax burden to 25%.
The announcement was made on Thursday, June 6, during the budget presentation in the National Parliament, chaired by Speaker Shirin Sharmin Chaudhury and attended by Prime Minister Sheikh Hasina. Prior to the presentation, the proposed budget received cabinet approval and was signed by President Md. Sahabuddin.
Key Provisions on Corporate Tax
Reduction in Corporate Tax Rate: For companies not listed on the stock exchange, the corporate tax rate will be reduced from 27.5% to 25%. However, this reduction is conditional on specific financial practices.
Conditions for Reduced Rate: To qualify for the reduced tax rate, companies must ensure that any single transaction exceeding Tk 5 lakh and all annual expenses or investments exceeding Tk 36 lakh are conducted through banking channels. This measure is intended to promote transparency and discourage unreported cash transactions.
Tax Rates for IPOs: Companies that list on the stock market and offer more than 10% of their shares through Initial Public Offerings (IPOs) currently enjoy a corporate tax rate of 20%. If they offer less than 10% of their shares, the rate is 22.5%. The proposed budget increases these rates by 2.5% each, to 22.5% and 25%, respectively. However, companies that meet banking transaction requirements will also receive a 2.5% tax reduction.
Penalty for Non-Compliance: Companies failing to comply with the banking transaction requirement will continue to face a higher tax rate. Non-listed companies that do not meet the transaction criteria will
Budget 2024-25: 2.5% Reduction in Corporate Tax for Non-Listed Companies
In the new budget for the fiscal year 2024-25, Finance Minister Abul Hasan Mahmood Ali has proposed a 2.5% reduction in the corporate tax rate for non-listed companies. This change lowers the rate from 27.5% to 25% for privately-held firms, aiming to alleviate tax burdens and encourage better financial practices.
The announcement was made during the budget presentation on Thursday, June 6, in the National Parliament, chaired by Speaker Shirin Sharmin Chaudhury, with Prime Minister Sheikh Hasina in attendance. The proposed budget had earlier received cabinet approval and was signed by President Md. Sahabuddin.
Detailed Breakdown of Corporate Tax Adjustments
Lowered Corporate Tax Rate: The corporate tax for non-listed companies will be reduced to 25%, down from the current 27.5%. This reduction aims to make private businesses more competitive and compliant.
Conditions for Reduced Tax: To benefit from the reduced tax rate, companies must ensure that any single transaction over Tk 5 lakh and all annual expenditures or investments exceeding Tk 36 lakh are processed through banking channels. This condition is set to increase financial transparency and accountability.
Tax Rates for IPOs: For companies listed through Initial Public Offerings (IPOs), the corporate tax rate will be adjusted based on their share offerings. Companies offering more than 10% of their shares will face a tax increase from 20% to 22.5%. Those offering less than 10% will see an increase from 22.5% to 25%. These companies can also receive a 2.5% tax reduction if they comply with the banking transaction requirement.
Penalties for Non-Compliance: Companies failing to adhere to the banking transaction stipulations will not benefit from the reduced tax rates. Non-listed companies that do not meet these requirements will continue to be taxed at the higher rate of 27.5%.
This proposed adjustment in corporate tax aims to streamline tax obligations, encourage the use of formal banking channels for large transactions, and ensure greater financial transparency within the corporate sector.
Reviewing the U.S. Stock Markets, the Nasdaq Composite, recorded a decent loss of 1,023 points, reaching a closing value of 16,690 points by the end of the week. Similarly, the S&P 500 index showed a positive trend, losing 240 points to settle at 5,408 points. Meanwhile, DJIA Index experienced a notable hike, adding 1,218 points during the week and concluding at 40,345 points after a week of gaining.
In contrast, Russell 3000 Index saw a loss in week performance, with a slight drop of 141 point to reach 3,077 points by the end of the week.
Moving to Russell 2000 Index, demonstrated a notable lost of 126 points, ending the week at 2,091 points.
In the Outgoing week, the European stock market displayed a mixed performance.
Here is the data on the weekly performance of the European Stock Market, The STOXX Europe 600 index, which is considered a leading benchmark for the European market and covers approximately 90 percent of the market capitalization across 17 countries, reported a loss of 18.49 points to close at 506.56.
The United Kingdom’s FTSE 100, one of the most widely followed indices in Europe, also showed a significant drop, losing 195 points or finishing the session at 8,181.
In Germany, the DAX 30 index, added by 605 points to reach 18,301, while France’s CAC 40 decreased by 278 points to stop at 7,352 at the end of the trading day.
Italy’s FTSE MIB, which covers the top 40 stocks traded on the Milan Stock Exchange, decreased by 1,081 points to 33,291. However, Spain’s IBEX 35, lost by 228 points, to close at 11,173.
A review of South Asian stock markets shows that India’s Bombay Stock Exchange (BSE) index BSE Sensex has lost 1,182 points during the week. At the end of the week, the index stood at 82,365 points. On the other hand, the Nifty-50 index of the country’s National Stock Exchange dropped by 383 points last week. At the end of the week, the index stood at 24,852 points.
Pakistan Stock Exchange Index ‘KSE 100’, added 459 points last week. After a week of losing, the index settled at 79,002 points.
On the other hand, The Sri Lankan stock market index loss, and the Colombo Stock Exchange index ‘ASPI’ decreased by 94 points in a week. After a week the index settled at 10,775 points.
Bhutan’s stock market index ‘BSI’ dropped by 9 points hence the index stood at 1,500 points throughout the whole week. Nepal’s ‘NEPSE’ lost 22 points, therefore the index stands at 2,727 points.
Hence Dhaka Stock Exchange: The benchmark index ‘DSEX’ lost by 75.77 points or 1.31 percent, in the outgoing week. At the end of the week, the index stands at 5,728 points.
