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.
