Tax rate in Bangladesh in 2023:
In Bangladesh, Tahmidur Rahman Remura TLS Associates has a large practice and experience in tax and VAT related services. Tahmidur Rahman Remura TLS Associate, as a major law firm, has been named the best tax law firm of the year by Global Law Experts 2022, in recognition of its top tax and VAT services in Bangladesh.
Tahmidur Rahman Remura TLS Associates provides the best Tax lawyers in Bangladesh who are experts in Tax Law, which is classified into two categories: Value Added Tax and Income Tax.
There are also various forms of taxes, such as customs duty, gift tax, supplemental duty, and so on. With us, you get a complete answer to your taxation issues. This may involve advising the tax implications of various transactions entered into by an organization, tax deducted at source from salaries, tax withheld from suppliers, quarterly withholding tax return, annual corporate tax return, or the s. 108 return to the tax authorities.
We also represent customers before the taxation authority to settle any disputes or before a tribunal or Court of law to settle or fight a tax appeal. It is critical that you realise the full value of tax-related services in Bangladesh, including the most up to date Tax rate in Bangladesh. Our financial team, in collaboration with our legal team, will ensure complete compliance with finance and law.
The purpose of this paper is to provide an overview of the current state of Income Tax in Bangladesh. All material in this document has been compiled in accordance with the Income Tax Ordinance of 1984, SROs, and the National Budget Speech of 2022-2023. Consequently, this document includes an up-to-date version of the Income Tax of several significant sectors in Bangladesh.
Here is a detailed table outlining the tax calculation process in Bangladesh:
|1||Determine your tax residency status|
|2||Determine your taxable income|
|3||Calculate your tax liability using the tax rates and thresholds|
|4||Deduct any applicable tax credits or exemptions|
|5||Pay any taxes due to the National Board of Revenue (NBR)|
Here is a more detailed explanation of each step:
- Determine your tax residency status: In Bangladesh, tax residency is determined based on your physical presence in the country. If you are physically present in Bangladesh for 183 days or more in a tax year, you are considered a tax resident. If you are physically present in Bangladesh for less than 183 days in a tax year, you are considered a non-resident.
- Determine your taxable income: Your taxable income includes all forms of income earned or received in Bangladesh, such as salary, rental income, and investment income. Certain types of income, such as agricultural income and certain types of foreign income, are exempt from taxation in Bangladesh.
- Calculate your tax liability: Once you have determined your taxable income, you can calculate your tax liability using the tax rates and thresholds specified in the tax laws of Bangladesh. The tax rates vary depending on the type of income and the amount of income earned.
- Deduct any applicable tax credits or exemptions: There are various tax credits and exemptions available in Bangladesh that can be claimed to reduce your tax liability. These include credits for charitable donations, home ownership, and child education, among others.
- Pay any taxes due: Once you have calculated your tax liability, you must pay any taxes due to the NBR. Taxes can be paid online through the NBR’s e-payment portal or at a designated bank or financial institution.
Please note that this is just a general overview of the tax calculation process in Bangladesh. The specific tax laws and rules may vary and are subject to change. It is always best to consult with a tax professional or refer to the NBR’s website for the most accurate and up-to-date information.
Tahmidur Rahman Remura and its Tax litigation department:
We also provide clients with normal services for personal income tax matters, such as return preparation and submission, tax clearance certificate, and tax residence certificate. Tahmidur Rahman Remura TLS Associates also provides significant legal help in income tax reference matters before the Supreme Court of Bangladesh under Section 160 of the Income Tax Ordinance.
We are well-known for our honesty, efficiency, and high levels of partner involvement. Our reputation is built on the simple principle of providing personal, prompt service and business advice that is relevant to today’s needs and current Tax rate in Bangladesh. Your subscription to our service will connect you with a team of committed, highly vetted professional Lawyers, accountants, and tax advisors who will learn about your business practices and operations and begin delivering the best probable solutions.
We set and maintain the highest quality standards for ourselves. This is evident not just in our selection of partners and competent staff, but also in their ongoing training. Our Associates are regularly attending external continuing professional development seminars to further their specific knowledge in a variety of fields.
Minimum Tax Rate and Tax rate in Bangladesh
It is suggested to reduce the business turnover tax rate for individual taxpayers by 0.5 percentage points.
Reduction of the company’s tax rates
It is planned to cut the corporate tax rate from 25% to 22.5%.
It is suggested to cut the tax rate for privately held corporations from 32.5% to 30%.
The tax rate on artificial entities and other taxable entities besides corporations and partnerships has been set at 30%.
It is recommended that private universities, medical institutions, and engineering colleges pay a 15% tax on their income.
It is planned to align the tax rates of mobile financial service providers with those of publicly traded banks and insurers.
b) One-Person Business (and PC) Tax Rate
The recommended tax rate for one-person corporations (OPC) is 25%.
Taxpaying Individual of Third Gender and their Tax rate in Bangladesh
It has been planned to increase the tax-free threshold for taxpayers of the third gender to TK 350,000.
If a taxpayer employs 10% or more of the organization’s entire workforce or more than 100 employees of the third gender as the hiring authority, the taxpayer is eligible for the following tax relief:
whichever is smaller, 5% of the tax due or 75% of the total compensation paid to third-gender employees.
Tax rate in Bangladesh for Individuals
Income Tax Rate for an individual:
a) Minimum Tax Rate: The business turnover tax rate for individual taxpayers is 0.25%.
b) Investment Credit: Investment credit will be allowed a flat 15% of the eligible amount. The ceiling for calculation of eligible amount for investment credit is 20% of total income. Moreover, the rate of investment credit will be 7.5% in case of failure in the submission of return.
c) Submission of Income Tax Return:
- Date of Submission: One has to submit the 1st Income Tax Return on 30th June of the end of an income year.
- Importance of submitting Income Tax Return: The Submission of Income Tax Return has been made mandatory for obtaining or maintaining a credit card as well as in respect of selling land situated in specific areas in which the deed value exceeds tk. 1,000,000 (Ten Lakhs only).
- The Requirement of ETIN has been changed with proof of submission of return
d) Submission of IT-10B: One has to submit IT-10B (Asset & Liabilities Statement) for all local and global assets & liabilities.
|Existing Tax Step||Existing Tax rate|
|Up to Tk. 3 Lac.||0|
|On next Tk. 1 Lac.||5%|
|On next Tk. 3 Lac||10%|
|The next Tk. 4 lac||15%|
|The next Tk. 5 lac||20%|
|The rest of the money||25%|
Justifications for surcharges
It has been recommended in five steps as opposed to the current seven.
The provision requiring the payment of surcharges on assets in the absence of income has been repealed.
It has been proposed that the minimum search fee be eliminated.
Rationalisation of the rate of fishing income tax
Instead of the current three steps, four steps are proposed for the income Tax rate in Bangladesh:
It is proposed to impose a 15% tax on income over Tk. 30 lacs, as opposed to the current 10% tax on income exceeding Tk. 20 lacs.
|Amount of income||Tax Rate|
|On income up to the first Tk 10 lac.||0|
|On income up to the next Tk 10 lac||5%|
|On income up to the next Tk 10 lac||10%|
|On the remaining income||15%|
Deduction at Source and Tax rate in Bangladesh:
Tax Rate in Bangladesh for Corporations:
Publicly Traded Companies may be categorized as follows:
The tax rate for publicly traded companies (those that have issued at least 10% of their stock through an IPO) is 20%. In the event of a violation, the Tax rate may be increased to a maximum of 22.5%.
a) The tax rate for a publicly traded company (with less than 10% of its shares issued through an IPO) is 22.5%. In the event of a violation, the Tax rate may be increased by up to 25%.
b) Non-listed Public and Private Companies are subject to a 27.5% tax rate. In the event of a violation, the Tax rate may be increased up to 30%.
c) The tax rate on artificial entities and other taxable entities outside corporations and partnerships has been set at 27.5%. In the event of a violation, the Tax rate may be increased up to 30%.
d) A 15% tax will be placed on the income of private universities, private medical colleges, private dental schools, private engineering colleges, and private colleges entirely devoted to providing ICT education.
e) The Tax Rate for Individual Associations is 27.5%. In the event of a violation, the Tax rate may be increased up to 30%.
f) The One Person Company (OPC) tax rate is 22.5%. In the event of a violation, however, the Tax rate may be increased to a maximum of 25%.
Please remember that all income and receipts must be processed through bank transfer. In addition, all expenditures and investments above Tk. 12, 00,000 (Twelve Lakhs) annually must be transferred via bank.
Tax Rate on Banks and Financial Institutions:
37.5 percent for publicly traded banks, insurance companies, and financial institutions (except merchant banks). On the other side, a 40% Tax will be placed on non-publicly traded banks, insurance companies, and financial institutions. In addition, a 37.5% Tax Rate will be applied on Merchant Bank.
Tax Rate on Tobacco-Producing Corporations:
A tax of 45% plus 2.5% (surcharge) will be levied on corporations that manufacture cigarettes, bidis, chewing tobacco, and gul.
Tax Rate for Publicly Traded Mobile Operators:
40% Taxes will be levied on publicly traded mobile operator companies. In contrast, the tax rate levied on privately held mobile operator companies is 45%.
vi) Taxpayer belonging to the Third Gender
a) The present tax-free threshold for taxpayers of third gender is up to TK 350,000.
b) If a taxpayer employs 10% of the organization’s entire workforce or 25 individuals from the physically challenged or third gender group, the business is eligible for:
5% of tax payable or ; 75% of the wage paid to these individuals or 5% of tax payable, whichever is lower vii) Tax on information and communication technology (ICT) (Start-up Business): For the purpose of supporting ICT-related startup firms, all other types of reporting are exempted, although a tax return must be filed. In addition, the rate of turnover tax has been set at 0.10 percent.
Tax on the Textile Industry:
The present Textile Sector tax rate is 15%. This structure will be accessible until June 30, 2025.
Tax on Non-Residents:
The National Board of Revenue has been tasked with formulating the right scope, areas of income, and exemptions for Non-Residents in order to ensure proper revenue collection from them. It may also involve incorporating a provision mandating the production of proof of tax return in circumstances where a person from Bangladesh earns revenue through digital presence.
Rationalisation of source tax rate at import stage
The source tax rate at the import stage has been proposed as follows:
- 2% on Cement industry raw material instead of existing 3%.
- 1% on Ocean liners instead of existing 2%.
- 5% on all types of cash registrar results, propellers instead of zero.
- 3% on Coconut fiber instead of existing 5%.
- All types of alcohol and perfumes 20% instead of 5%.
Reduction of Tax rate in Bangladesh source at the supply stage
- It is proposed to reduce the tax rate on cement, iron and iron products from 3% to 2%.
- The following 3 steps have been proposed instead of the existing 4 steps of tax rate against supply.
Reduction of tax rates on common sources
- 3% on HR coil and zinc, raw materials used for manufacturing galvanized iron sheets or steel products.
- 20% source Tax on Bank interest for Company taxpayers
- 1% source tax on export proceeds
- 10% on the payments made to non-residents on account of bandwidth payment, in the case of the non-scheduled payments the tax rate will become 20%.
- 5% source tax on lease rent of water bodies except for the ones owned by the government.
- If a resident contractor delivers any service to a non-resident contractor in Bangladesh, it is recommended to reduce the withholding tax rate from 10% to 7.5%.
- It has been proposed not to deduct income tax at the source from Workers Participation Fund or Workers’ Participatory Fund payments up to TK 25,000.
Rationalisation of general source tax rates
In the case of the public auction sale or lease of any commodity property or rights, it is suggested to collect advance tax at source at the rate of 10% instead of the current 5% from the auction buyer.
Under the 2013 Overseas Employment and Immigration Act, it is recommended that TK 50,000 be collected at the point of renewal.
It has been recommended to introduce a mechanism for deduction at source when paying bills as opposed to renting electricity from all types of power-generating enterprises.
Reduction of the advance tax on aged vessels:
The advance tax per passenger for vessels older than ten years has decreased from Tk.125 to Tk.100.
The Digital Transformation of Bangladesh
In addition to the 22 existing tax-free industries in Bangladesh’s digital transformation, the following six sectors have been declared tax-free.
a) Cloud-Based Service
c.) System Integration
c.) online education platform
d.) electronic book editions
f.) Mobile applications development service and
f.) Freelancing in IT
An incentive for “Made in Bangladesh” mega-industrial production:
In order to propel Bangladesh forward in the mega-industry, an automotive (three-wheelers and four-wheelers) manufacturing company with an investment of at least Tk. 100 billion or more should be exempt from taxation for twenty years. In addition, revenue made in foreign currency by ocean-going vessels flying the Bangladeshi flag is exempt from taxation until 2030, so long as it is delivered to Bangladesh via a banking channel.
Regarding this, a 12% tax rate will be applied on all other sectors exporting goods and services, while a 10% tax rate will be imposed on all other industries exporting green goods and services.
Incentives for the production of home appliances in Bangladesh:
The industries of washing machines, blenders, microwave ovens, electric sewing machines, induction cookers, kitchen hoods, and kitchen knives & kitchen equipment will be exempt from taxation for ten years. The existing exemption facility has been enlarged to include the importation of raw materials utilized by these industries.
Agricultural product industrialization:
a) Examples of value addition to agricultural products manufactured in Bangladesh as a result of industrialization include:
- Fruit processing
- Vegetable processing
- Producers of dairy and dairy products as well as baby food
- The business owner has been granted a 10-year tax exemption.
b) Manufacturers of agricultural machinery have been granted a 10-year tax exemption.
National employment and skills development incentives:
Institutions providing education and training in the following fields to generate trained human resources appropriate for industrialization shall receive a 10-year tax exemption.
i. Diplomas, degrees, and vocational training in all disciplines of agriculture, fisheries, science, and information technology;
Automobiles, Aircraft, Food Preservation Foot over, Glass Mining Mechanical, Shipbuilding, Leather, Refrigeration, Ceramics, Mechanist, Garments, provide professional training on Design, and Pattern Making, Pharmacy, Nursing, Integrated Medical, Radiology & Imaging, Ultrasound, Dental, Clothing & Garment Finishing, Poultry Farming.
Which types of products comprise the light engineering industry:
a) Will only be utilized in industrial factories
b) There will be no entire instrument components available.
Entrepreneurs in the manufacturing sector have been granted a 10-year tax exemption.
Incentives for entrepreneurship and employment in the IT hardware sector:
Bangladesh is dependent on imports for self-sufficiency in creating businesses and enterprises and as an employment stimulant in the IT sector. Ten years of tax exemption were granted to CCTV and flash drive producers.
Guaranteeing cheap and decentralised health care:
Income from hospital operations will be exempt from taxation for ten years if:
I Hospital must be located beyond the districts of Dhaka, Narayanganj, Gazipur, and Chittagong;
ii) There should be a hospital with at least 250 beds or a specialist hospital with 200 beds.
Help with microcredit collection:
In order to facilitate access to microcredit, the Micro Credit Regulatory Authority has exempted the income from organization licensing from taxation.
Stamp Duties for Deeds:
The Finance Act, 2022, has been amended with respect to Stamp Duties; the amount of Stamp Duties is mentioned below:
a) Declaration: BDT 300
b) Deed of Sale (Saf kabala): 1.5% of the subject property’s appraised value, not to exceed BDT 2,000,000)
c) Certified copies of legal documents: BDT 100
d) Declaration of Divorce: BDT 2000
e) Heba Declaration Document: BDT 1,000
f) Lease Agreement: The following stamp duties shall be applied to the Lease Agreement:
Leases between 5 and 25 years in duration shall include stamp duties of 0.2% of the subject property’s valuation, not to exceed BDT 1,000,000.
Leases with a duration of more than 25 years and a permanent nature will incur stamp taxes of 0.3%, not to exceed BDT 2,000,000.
In all other instances, a 0.3% stamp tax (not exceeding BDT 3,00,000,000 g) will be applied. Partnership Firm: If the Capital is BDT100,000, a Stamp Duty of BDT2,000 is applicable; otherwise, a Stamp Duty of BDT4,000 is applicable.
Durable Power of Attorney in Bangladesh:
$1,500 is the cost of the General Power of Attorney
The Special Power of Attorney costs BDT 800.
BDT 2000 is the cost of a Power of Attorney (Bank & Financial Institution)
Section 44(4)(b) of ITO, 1984 gives the government the authority to exempt any income, or a portion thereof, from Tax Liability as required by law. Consequently, the government has lately authorized various exclusions outside of the ITO, 1984, via the Official Gazette. Consequently, the relevant revisions are briefly outlined below:
a) Tax Rate on Export Income (SRO-158- Aain/Aikor/2022, effective 1 June 2022):
The government has exempted the following from Tax on Export Income from 01 July 2022 to 30 June 2025:
• Tax exemption of 50% on the export income of individuals, firms, and Hindu undivided firms.
• There will be a 12% tax exemption on the export earnings of others
• Other than Individual, Firm, and Hindu Undivided Firm, any revenue derived from exporting items manufactured in Leadership in Energy and Environmental Design (LEED) Certified Factories would be exempt from tax by 10%.
• This SRO-158-Aain/Aikor/2022 does not apply to any Transportation Service, Mobile Telecommunication Service, Internet, or Internet-Related Service.
b) Yarn production and dyeing (SRO- 159- Aain/Aikor/2022, dated 1 June 2022): The Government has imposed a 15% tax rate on the profits of businesses related to Yarn Production, dyeing, finishing, printing, and other businesses similar to these. The duration of this exemption is from 1 July 2022 to 30 June 2025.
Growth of the tax base and Tax rate in Bangladesh
a) It is recommended to mandate the acceptance of TINs in the following fields.
- Purchase of savings bonds exceeding Tk 2 lacs.
- Postal savings deposit exceeds Tk 2 lacs.
- Home design approval.
- Enrollment of Cooperative Societies
b) It is recommended to enable e-commerce platforms to qualify as tax-deductible sources.
Tax rate in Bangladesh and Automated Invoice Tax Payment
Taxes up to TK 5 Lac can be paid through an automated portal.
5.) The Digital Transformation of Bangladesh
In addition to the 22 existing tax-free industries in Bangladesh’s digital transformation, the following six sectors have also been designated tax-free.
a) Cloud-Based Service
c.) System Integration
c.) online education platform
d.) electronic book editions
f.) Mobile applications development service and
f.) Freelancing in IT
Encouraging “Made in Bangladesh” in big industrial production.
To advance Bangladesh in the mega-industry, a business that manufactures automobiles (three- and four-wheeled vehicles) and invests at least 100 billion taka would be exempt from taxes for 20 years.
Incentives for the manufacture of home appliances in Bangladesh and Tax rate in Bangladesh:
The industries of washing machines, blenders, microwave ovens, electric sewing machines, induction cookers, kitchen hoods, and kitchen knives & kitchen equipment will be exempt from taxation for ten years.
8.) Agricultural products industrialization
i.) Examples of value addition to agricultural products manufactured in Bangladesh as a result of industrialization include:
a.) Fruit preparation
b.) Vegetable processing
b.) Milk and dairy product production and
d.) Baby food manufacturers.
Entrepreneurial tax exemption for 10 years has been granted.
ii) Entrepreneurs who manufacture agricultural machinery have been granted a 10-year tax exemption.
9.) National incentives for skill development and employment
Institutions involved in providing education and training in the following fields for the purpose of developing trained human resources suited for industrialization shall receive a 10-year tax exemption.
Diploma Degree and Vocational Education in all fields of Agricultural Fisheries Science and Information Technology and Automobiles, Aircraft, Food Preservation Foot over, Glass Mining Mechanical, Shipbuilding, Leather, Refrigeration, Ceramics, Mechanist, Garments, provide professional training on Design, and Pattern Making, Pharmacy, Nursing, Integrated Medical, Radiology & Imaging, Ultrasound, Dental, Clothing & Garment Finishing, Poultry Farming.
10.) Encouragement of light engineering entrepreneurship and employment
Which types of products comprise the light engineering industry:
i.)Will only be used in industrial plants and
ii)There will be no entire instrument components.
Entrepreneurs in the manufacturing sector received a 10-year tax exemptions.
Incentives for entrepreneurship and employment in the IT hardware industry
Bangladesh is dependent on imports for self-sufficiency in creating businesses and enterprises and as an employment stimulant in the IT sector. A 10-year tax break has been granted to manufacturers of CCTV equipment and flash drives.
ensuring cost-effective and decentralized medical care
It is recommended that hospital operation income be exempt from taxation for a period of ten years if:
Hospital must be located outside of the districts of Dhaka, Narayanganj, Gazipur, and Chittagong, and there must be at least 250 beds or 200 specialized beds.
Encouragements for Female Entrepreneurs
If the yearly revenue of a woman-owned SME sector is less than TK 70 lacs, the income of the company is excluded from income tax.
Contribution to the development of the bond market for long-term capital collecting
In order to develop a market for the easy circulation of Sukuk bonds for long-term capital mobilization, it is proposed that the tax applicable to the retransfer of property from the trust or SPV to the parent company be waived.
Reduction of depreciation rate for building & structure:
Tax rate in Bangladesh for building & structure–
|Existing rates||Recommended rate|
Tax rate in Bangladesh and Formalisation of the system:
It is proposed that the following expenses must be paid by bank transfer and mobile financial services or MFS.
a.)Salary benefits exceeding Tk 15,000
b)Any rental sum and
b.) If the total of all other expenditures reaches TK.50,000
ii) It is recommended to deduct an additional fifty percent of the existing source tax rate if the supply and contracting invoice is not paid via banking or mobile financial services (MFS).
Contribution to microcredit collection
In order to facilitate access to microcredit, it is proposed that Micro Credit Regulatory Authority license fees be free from taxation.
Services for Tax Litigation in Dhaka and Chittagong, Bangladesh by Tahmidur Rahman Remura TLS (Tax rate in Bangladesh):
There are various orders of tax authorities that might be appealed by an assessee. The aggrieved assessee may file an appeal with the relevant appeal forum. In such situations, the aggrieved tax authority may also submit an appeal. Appeals can be lodged with many bodies, including the Taxes Appellate Tribunal. Appeals can also be filed at the Supreme Court’s High Court Division. The above-mentioned appeal facilities are termed as Tax Litigation in the Income Tax Ordinance of 1984.
Orders that irritate an Assessee include:
a) Income Assessment
b) Tax Liability or Refund Calculation
c) Loss set-off and carry-forward d) Imposition of any penalty or interest e) Charge and computation of surcharge or any other sum
d) Tax Deduction
e) Payment of Refunds
Bangladesh’s Tax Appellate Authorities and Tax rate in Bangladesh:
1) Appeal to IJCT against TRO order: Any person aggrieved by a TRO order under section 139 may, within 30 days after the date of service of the order, appeal to the IJCT to whom the TRO is subordinate, and the IJCT’s decision on such appeal shall be final.
2) Appeal to Additional/Joint Commissioner of Taxes or Commissioner of Taxes against Deputy Commissioner of Taxes Order: Any aggrieved assessee other than a company must file an appeal with the Additional/Joint Commissioner of Taxes, and any aggrieved assessee who is a company must file an appeal with the Commissioner of Taxes within 45 days of receiving the concerned order.
3) Appeal to the Commissioner of Taxes against the order of the Additional/Inspecting Joint Commissioner of Taxes: Any aggrieved assessee may file an appeal with the Commissioner of Taxes against the order of the Additional/Inspecting Joint Commissioner of Taxes within 45 days of receiving the relevant order.
4) Appeal to the Taxes Appellate Tribunal against the order of the Additional/Inspecting Joint Commissioner of Taxes or the Commissioner of Taxes against: The Taxes Appellate Tribunal hears appeals against the order of the AJCT or the Commissioner of Taxes, as the case may be. An assessee must file an appeal within 60 days after receiving the appeal order.
5) Appeal to the Supreme Court’s High Court Division against the Taxes Appellate Tribunal’s Order: The assessee or the Commissioner may refer to the Supreme Court’s High Court Division within 90 days of receiving the Taxes Appellate Tribunal’s order.
6) Any dispute between an assessee and any income tax authority, Tax Appellate Tribunal, or the Supreme Court may be handled throughTahmidur Rahman Remura TLS Tax Litigation Services’ Alternative Dispute Resolution (ADR).
The Tax Expert provides legal logic in accordance with the Income Tax Ordinance and Rules addressing the grounds of disputes in order to protect the taxpayer’s interests.
Making legal appeals on clients’ behalf in accordance with the Income Tax Ordinance and Rules and Tax rate in Bangladesh. Present at the hearing with a proper response or logic to the grounds for the disagreements.
To carry out the aforementioned role, Tahmidur Rahman Remura TLS employs professionally qualified individuals and tax specialists who can deal with NBR in a manner that protects the tax payer’s interests.
Recent modifications to the Income Tax Ordinance, 1984 (ITO, 1984) in 2023:
In 2023, modifications were made to the Income Tax Ordinance (ITO) of 1984. The modifications are briefly described below:
xxii) Special Tax: Sections 19AAAA (relating to Special Tax Treatment for Undisclosed Property, Cash, etc.) and 19AAAAA (relating to Special Tax Treatment for Investment in the New Industrial Enterprise) have been deleted. However, Section 19AAAAAA has recently been inserted regarding Special Tax Treatment for investments in new industrial undertakings, stating that no authority shall question the source of income if any amount of money (along with 10% tax on the invested amount) is invested in a new industrial undertaking between 1.07.2021 and 30.06.2022 (both dates inclusive) The above-mentioned Tax shall be payable via pay order or electronic challan.
xxiv) Excess perquisites limit: Section 30(e) of the ITO has been revised. Now, an employer will enjoy the benefits of section 30 of the ITO if his expenditure on perquisites under section 2(45) for any employee exceeds BDT 1,000,000 (ten lakhs), as opposed to the previous limit of tk. 5,50,000 (five lakhs and fifty thousand only).
xxv) Reckoned income: debt cancellation: Section 19 (11) is changed. The provision of Section 19 (11) shall not apply to the Individual. Therefore, a loan or interest waived by a commercial bank, Bangladesh Krishi Bank, Rajshahi Krishi Bank, or any leasing firm will not be considered income for a person.
xxvi) Deemed income (Receipt of loan or gift): Deposits received by a bank, financial institution, or organization registered with the Micro Credit Regulatory Authority or the NGO Affairs Bureau must not be deemed to be income under section 19 of the Income Tax Act (21). In addition, any loan or gift received from the Assessee’s spouse or parents (or sons or daughters) that is processed through a banking channel or formal channel shall not be considered income under the aforementioned clause.
xxvii) 5% special reserve: Since Section 29(1)(v) has been repealed, 5% special reserve established by a Financial Institution is now permissible.
xxviii) Tax implications of the Amalgamation scheme: Section 32 (5A) has been added. No tax is imposed on any capital gain resulting from the transfer of a capital asset in a merger or consolidation. Nonetheless, any consideration received by the shareholders of the merging companies in a form other than shares of the resulting company shall be liable to tax. In addition, the section 32(7) tax exemption for capital gains from government securities is no longer in effect.
xxix) Requirement of submitting an audit report for Tax rate in Bangladesh: Section 35 has been somewhat altered; formerly, this requirement applied to all firms incorporated by the Companies Act of 1913 or the Companies Act of 1994, as amended by “Company” in section 2(20) of the ITO. Consequently, section 20(2) of the ITO requires the “Company” to submit the audit report with the income tax return.
xxx) Business loss & Unabsorbed Depreciation for the amalgamated company: Subsection 8 of Section 42 of the ITO has been added to allow the amalgamated company to carry forward the accumulated loss and unabsorbed depreciation of the ambulating company.
xxxi) New Requirements for Exemption/Reduced-Rate Facilities: New conditions have been introduced to Section 44(5). (a). The new requirements are:
a) All receipts from exempted sources of income or income subject to a reduced tax rate must be received via bank transfer.
b) In the event of failure to comply with the provisions of chapter VII, exemption under section 44 of the ITO, 1984 may be denied.
c) The aforementioned provision regarding obtaining revenues via bank transfer applies to an individual assessee whose gross receipts do not exceed Tk 1,000,000 (one Crore) and to agricultural or farming income (Tax rate in Bangladesh).
xxxii) Failure to file a return under Chapter VII: Section 52(a) has been modified. According to the amended rule, if the payee does not produce proof of return submission at the time of payment, or if the payee does not receive payment by bank transfer, the payee will be subject to a penalty. In such instances, the TDS rate shall be increased by fifty percent (50%) over the standard TDS rate.
xxxiii) New Deducting Authorities: Hotels, resorts, community centers, and transport agencies with an annual turnover in excess of One BDT Crore have been added to Section 52 of the ITO as Deducting Authorities.
xxxIV) Tax on certain services The following modifications have been made to Section 52 AA:
a) The higher rate applicable to bases exceeding 25 million rupees has been excluded.
b) Rate changes for media buying agencies, indenting commissions, mobile networks, auto repair shops, etc.
b) 10% TDS on Internet service is recently implemented
d) The TDS rate shall be increased by fifty percent (50%) if the payee fails to present proof of submission of return at the time the payment is made, or if the payee does not receive payment by bank transfer.
xxxv) The TDS on the export of commodities has been modified per Section 53BB. According to the new amendment and Tax rate in Bangladesh, 1% TDS will apply to all export items, whereas 0.05% TDS previously applied to certain export commodities. In addition, section 53BBBB is eliminated.
xxxvi) TDS on savings/fixed deposit interest: The amendments to section 53 F pertaining to TDS on savings/fixed deposit interest are as follows:
a) If Company is the recipient, the new TDS rate will be 20%
b) The TDS rate will be increased by 50 percent if proof of submission of return is not provided at the time of payment.
c) A parent’s proof of submission of return shall be accepted as a minor’s proof of submission of return.
xxxvii) TDS on property leases: Section 53 HH has been replaced. The provision currently states, “Any registering officer responsible for registering any document relating to any lease of immovable property for at least 10 years shall not register until the tax of 4% of the lease amount is paid by the lessor.”
Deduction from the income of non-residents: Section 56 has been modified somewhat. First, 10% TDS is now added to Bandwith payments. Second, TDS on all other payments has been reduced to 20% from 30%.
xxxix) Consequences of failing to deduct: Section 57 has been changed and new penalties-related sections have been added:
a) Whoever fails to comply with the TDS chapter of the ITO will be fined BDT 1,000,000 (ten lakhs only).
b) New measures for imposing penalties on people and entities responsible for deducting or collecting tax are added.
xxxx) Return of Income: The list of “submission not mandatory” has been updated in accordance with section 75 of the ITO; the following are no longer required to file a return of income:
a) A non-resident without a permanent base in Bangladesh; or
b) Any category of individuals whom the Board may, by decision published in the official gazette, exempt from filing the return.
b) All Funds with the exception of Approved Provident/Gratuity/Pension/Superannuation Funds
d) Monthly Payment Order (MPO) schools that have implemented an English version in their school.
e) A publicly funded university.
Spot Evaluation: Section 82 D has been replaced. The provision of spot assessments at all levels in accordance with Section 82D of the ITO has been expanded outside the growth centers. In addition, the following modifications are made to section 82D:
a) If the assessment of an assessee who has income from a trade or profession is done under this section at the ordinary rate and the assessee pays tax appropriately, no inquiry shall be undertaken into whether the initial capital exceeds five times the assessed income for Tax rate in Bangladesh.
b) The Board (National Board of Revenue) shall issue guidelines for the way in which this section’s assessment is to be made.
xxxxii) Assessment question bar: Section 94B is added. This addition provides that, with the exception of the “Income Tax Authorities” listed in section 3 of the ITO and the courts and authorities listed in Chapter XIX, no one shall have the ability to contest a Chapter-IX assessment.
xxxxiii) Start up Stand Box: The addition of Section 111A. The following are some of the most significant details of this newly introduced provision:
a) A startup is a company with an annual sales of less than Tk 1 billion and that is neither a subsidiary nor a merged entity.
b) The provisions of Sections 30 and 30B do not apply to growth years.
c) If, during a growth year, a startup registered under this section incurs a loss that cannot be fully set off, the amount of the loss that has not been set off shall be carried forward to the following assessment year and so on for a maximum of nine (nine) consecutive assessment years.
d) The minimum rate of turnover tax has been reduced from 0.6% to 0.1%.
e) Obtaining registration under NBR is subject to a number of restrictions.
xxxxiv) Disconnection of utility service connections: a new subsection 143(2)(c) has been added. In the event that the undisputed tax liabilities are not paid within 21 (twenty-one) days of receiving the notice, the utility service connections, such as gas, electricity, water, etc., will be terminated. In this connection, any aggrieved party may seek resolution of the dispute through ADR under section 152I, which has also been changed.
Proof of Return Submission:
The Proof of Return Submission shall be considered as confirmation of return receipt. In the event that PSR is not collected, the individual will be declared a defaulting assessee and subject to a penalty not to exceed Tk. 10,000,000. (Ten Lakhs only). In accordance with section 184A, this submission must be made in the specified sectors, some of which are listed below:
- becoming a corporate director or sponsor shareholder;
- Requesting a loan from a bank or financial institution in excess of five million Taka:
- Obtaining or continuing to hold an import registration certificate or export registration certificate, or a trade license in the area of a city corporation or paurashava; or s license or enlistment as a surveyor of general insurance; or license as a Nikah Registrar under the Muslim Marriages (Registration) Act. 1974 (LII of 1974); obtaining registration of co-operative society; obtaining registration, by a resident, of the deed of transfer, baynanama
- obtaining or maintaining a credit card; obtaining or continuing the membership of the professional body as a doctor, dentist, lawyer, chartered accountant, cost and management accountant, engineer, architect or surveyor or any other similar profession; obtaining the admission of a child or a dependent in an English medium school providing education under the international curriculum or the English version of the national curriculum, located in any city corporation, district headquarters, or municipality; obtaining or continuing the membership of the professional body as a chartered accountant, cost and management
- receiving any payment which is an income of the payee classifiable under the head “Salaries” by a person employed in the management or administrative function or in a supervisory position in the production function; or receiving any payment which is an income of the payee classifiable under the head “Salaries” by an employee of the government or an authority, corporation, body or units of the government formed by any law, order or instrument in force, if the emloyee is
- Receiving any payment by a resident from a company on account of any advisory or consultancy service, catering service, event management service, supply of manpower or providing security service; Releasing overseas grants to a non-government organization registered with NGO Affairs Bureau or to a Micro Credit Organisation with a license from the Micro Credit Regulatory Authority; Selling any goods or services by any digital platforms to consumers in Bangladesh.
- submitting application for the membership of a club registered under , ( ) and Societies Registration Act, 1860 (Act No. XXI of 1860); submitting tender documents by a resident for the supply of goods, execution of a contract, or rendering of a service; submitting a bill of entry for import into or export from Bangladesh; submitting a plan for construction of the building for the purpose of obtaining approval from Rajdhani The 184 C section has been modified. Now, a person with business income must show this proof of return in a conspicuous location on the assessee’s business premises; a penalty will be applied for failure to comply.
Income Tax Fees:
A new amendment has been made to section 16 of the ITO. Capital gains, dividends, and winnings are taxed at the rates outlined in Chapter VII and the Second Schedule.
Are you intending to do your corporate/personal taxes in Bangladesh (Tax rate in Bangladesh)?
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The legal team of Tahmidur Rahman, The Law Firm in Bangladesh: TLS, The Law Firm in Bangladesh are highly experienced in providing all kinds of services related in doing taxes as per the current Tax rate in Bangladesh. For queries or legal assistance, please reach us at:
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