Dhaka, Bangladesh (BBN)- The country’s non-banking financial institutions (NBFIs) have reiterated the demand to restore the depreciation allowance on leased assets as it will lead to great increase of corporate tax on the financial institutions.
“The existence of our industry will be at stake due to the sudden amendment to the third schedule of Income Tax Ordinance,1984 which withdrew the depreciation allowance to the leasing industry,” Bangladesh Leasing and Finance Companies Association (BLFCA) acting Chairman Mafizuddin Sarker told reporters in Dhaka on Saturday.
He also added: “We had been enjoying the facility during the last 22 years but all on a sudden in the budget of 2007-08, it has been withdrawn giving a blow to our business which emerged as an alternative source of finance and well-sought-after-arm for credit for all kinds of enterprises, especially for the small and medium enterprises (SMEs).”
On reducing the corporate tax rate for financial institutions, from the existing 45 percent, the BLFCA chief said it is not practical to keep the banks and financial institutions in the same tax bracket, since a major part of the revenue of a bank comes from fee-based earnings like LC commission, commission on guarantees, remittances, substantial exchange income etc.
On reduction of tax on dividend income, the BLFCA said the demand, if fulfilled, will help to develop the local capital market.
In another plea, the BLFCA said banks/financial institutions/insurance companies should be allowed for tax exemption on their investment on zero coupon bonds issued by NBFIs.
BBN/SS/SI/AD-24May09-3:10 am (BST)