Budget 2026-27: No change in corporate tax rates

Despite repeated calls from the business community to lower corporate taxes, the government has kept corporate tax rates unchanged in the proposed budget for fiscal year 2026-27, Finance Minister Amir Khosru Mahmud Chowdhury announced on Thursday while presenting the budget in parliament.

"In the interest of policy continuity and to assure investors of a stable tax regime over the medium term, I propose keeping the existing corporate tax rates unchanged for the next tax year," the minister said.

However, he indicated that the government remains committed to gradually reducing rates in the future by expanding the tax net and improving collection efficiency.

The minister also outlined a set of taxpayer-friendly reforms accompanying the budget, including simplifying corporate tax compliance, enabling online income tax return filing and payment, reducing regulatory burden on businesses, expanding allowable business expenditures, and scrapping provisions that disallow costs when withholding tax is not deducted.

He added that the process of selecting tax cases for audit and withholding tax verification would be made fully transparent and automated.

Under existing rates, now carried forward, general companies defined under the income tax law face a flat rate of 27.5 per cent.

Listed companies that transfer more than 10 per cent of paid-up capital through IPO are taxed at 22.5 per cent, reducible to 20 per cent upon meeting additional conditions.

Publicly traded banks, insurance companies, and non-bank financial institutions face a 37.5 per cent rate, while their non-listed counterparts pay 40 per cent. Merchant banks are taxed at 27.5 per cent.

Tobacco product manufacturers, including cigarettes, bidis, zarda and gul, face the steepest burden at 45 per cent plus a 2.5 per cent surcharge.

Publicly traded mobile phone operators with at least 10 per cent IPO shareholding are taxed at 40 per cent, while non-listed operators face a 45 per cent rate.

Co-operative societies are taxed at 20 per cent. Private universities, medical, dental and engineering colleges, and IT-focused private institutions enjoy a concessional rate of 10 per cent.