From mobile users to metro commuters, Bangladeshis to face more tax

Mobile phone calls and metro rail commutes among other daily activities may cost more in the next fiscal year as the government looks to increase taxes to boost its revenue collections.

Lawmakers may lose their privilege to import vehicles without duty and have to pay almost 44 percent of the vehicle's price in import tax in the fiscal year that starts on July 1, said finance ministry officials after a meeting with Prime Minister Sheikh Hasina yesterday.

Duty-free import benefits on most items are not likely to continue, with exceptions for certain essential commodities.

On a brighter side, companies may enjoy a 2.5 percentage point cut in corporate tax rates for 2024-25 fiscal year if they meet certain conditions. Currently, non-listed companies pay 27.5 percent tax on profits.

High-income earners may face a 30 percent income tax, up from 25 percent now, while large stock market investors may be taxed on capital gains.

The tax measures will be aimed at helping the National Board of Revenue  achieve its Tk 4.80 lakh crore revenue target for 2024-25 (FY25).

The target represents a 17 percent increase compared to this year's target and exceeds the NBR's average annual revenue growth of 11 percent over the past five years.

At yesterday's meeting at the Prime Minister's Office, NBR officials presented tax plans and received PM's approval for most proposals that focused on increasing revenue collections and reducing reliance on borrowing to implement the budget, according to officials aware of the developments.

The NBR is considering maintaining the current Tk 3.5 lakh tax-exempt income threshold for the second consecutive year.

Stock investors might be taxed 5 percent to 25 percent on their capital gains, stemming from the sale of shares.

Carbonated beverage manufacturers are likely to face a 5 percent tax on their turnover in FY25, up from the existing 3 percent, said a senior official.

Similarly, manufacturers of cakes, biscuits, chocolates, jams, jellies, juices, and ice creams may also need to pay a 5 percent minimum tax on their turnover.

The NBR aims to collect Tk 1.77 lakh crore in income tax in the next fiscal year, a 20 percent year-on-year increase, according to officials.

It is likely to remove exemptions and reduce VAT benefits on nearly 20 items to increase the tax-to-GDP ratio. Bangladesh has one of the lowest tax-to-GDP ratios in the world.

The revenue administration is expected to raise the supplementary duty on mobile phone calls from the current 15 percent. It may impose VAT on metro rail travel fares, the officials added.

The NBR may target raising Tk 1.77 lakh crore through VAT, a 17 percent increase from the revised target for the current fiscal year. Similarly, a 12 percent spike in customs duty is projected as it looks to generate Tk 1.24 lakh crore from the segment.