Sonali Bank seeks tax exemption on Tk 26.29b amortised amount

Sonali Bank Limited has sought exemption on its amortised amount worth Tk 26.29 billion from its accumulated loss, incurred in the last four years, and adjusted against its 'goodwill' value.

It has sent a letter to the Ministry of Finance (MoF) seeking waiver on amortisation of the amount during the four-year period between 2008 and 2011.

The bank turned its accumulated loss of worth Tk 65.74 billion into its intangible assets in the form of 'goodwill', complying with the condition of vendors and directives of the MoF. The bank will have to amortize the amount within 2018.

Of Tk 65.74 billion, Sonali Bank limited amortized Tk 26.29 billion in the four-year period, from 2008 to 2011. It will have to amortise the balance worth Tk 39.44 billion in the next six years.

Sonali Bank amortised Tk 3.50 billion in 2008, Tk 5.0 billion in 2009, Tk 2.86 billion in 2010 and Tk 14.93 in 2011.

Sonali Bank is under supervision of Large Taxpayers Unit (LTU) of the income tax department.

Commissioner of the LTU Romendra Chandra Basak said the Sonali Bank is unlikely to get exemption of income tax on its amortised amount worth Tk 26.29 billion as existing income tax law has no such provision to offer the benefit.

In the letter, Sonali Bank said income tax authority has demanded tax on amortized amount of 2008 and 2009. It will also slap tax on the amortized amount of 2010 and 2011.

In 2008, tax authority imposed Tk 1.57 billion corporate tax at the then rate of 45 per cent of the amortised amount. In 2009, they have demanded Tk 2.12 billion at 42.5 per cent rate on the amortised amount.

"The bank is amortising the amount from its own income, resulting in negative impact on its profit. The move to reconstitute capital of the Sonali Bank will face setback and the liquidity problem will turn acute if the government slapped tax on it," Managing Director of Sonali Bank Pradip Kumar Datta said in the letter.

He said the bank could have enjoy tax rebate on its accumulated loss in the next six years if it was not turned into a public limited company.

There is no specific direction in the income tax law on offering tax exemption on the amount which will be turned into 'goodwill' from accumulated loss, he wrote.

It has requested the government to issue a Statutory Regulatory Order (SRO), accepting the amortised amount as allowable expense, he said.

The bank has shown the amortized amount under other assets-intangible assets and valuation adjustment in the tax returns.

Despite several attempts, the Sonali Bank managing director could not be contacted over phone

News Source: 
The Financial Express