Corporate tax for non-listed firms unchanged at 27.5%

The interim government has kept the corporate tax rate for non-listed firms unchanged at 27.5 percent for the fiscal year 2025-26, despite repeated demands from entrepreneurs and business chambers to reduce the tax, especially for those transacting through banking channels.

Currently, non-listed companies are taxed at 27.5 percent, but the rate drops to 25 percent if they conduct all transactions via banking channels.

This conditional benefit was previously welcomed by entrepreneurs and analysts, as it was seen as a measure to incentivise the formalisation of the economy.

However, the government has omitted the benefit and made it a flat 27.5 percent from the next fiscal year.

In its budget proposal, the government had earlier recommended a 22.5 percent corporate tax rate for listed companies that have offloaded at least 10 percent of shares through an initial public offering (IPO).

The rate could go down to 20 percent if all financial transactions were processed through banking channels.

Now, the 20 percent rate will be applicable for companies that have offloaded at least 10 percent of shares through direct listing, according to a press release from the finance ministry.

However, companies listed via direct listing or IPOs that have offloaded less than 10 percent of shares—such as Berger Paints and Walton Hi-Tech Industries—will not qualify for the reduced rate and will instead face the 27.5 percent tax.

But the rate may be reduced to 25 percent if all transactions are conducted through formal banking channels, the press release said.