Last modified: 23/04/2024 06:25

Corporate taxation

	Rate
Non-Listed Company (1)	27.5%/30%
Listed Company (2)	20%/22.5%/25%
Capital gains tax rate (3)	0%/10%/15%/specific rate

1. 2.5% rebate applicable if some requirements are met regarding non-cash transactions.
2. Different rates according to percentage of shares available in the stock exchanges and limitations on non-cash transactions.
3. Different rates as per nature of assets sold.

Residence: A company is resident in Bangladesh if its management and control is situated wholly in Bangladesh.

Basis: Resident companies are taxed on their worldwide income. Non-resident companies are taxed on permanent establishment (PE)/branch income and/or on immovable property located in Bangladesh. (after adjustment of allowable expenses as per tax law)

Taxable income: Corporate income tax is imposed on a company’s net profits including business/other income and capital gains. Foreign-source income is included in taxable income, but relief is granted for tax paid in foreign country as per Double Taxation Treaty (DTAA) or average rate (in absence of DTAA).

Significant local taxes on income: Not applicable.

Alternative minimum tax: 0.60 % of Gross Receipts and/or Tax deducted at source (TDS/Withholding Tax)

Taxation of dividends: Dividends are taxable for the recipient company and the rate of tax is 20%.

Capital gains: Capital gains form part of a company’s taxable profits and the rate of tax is 15%.

Losses: Shall be carried forward for six years and be set off against any income except capital gains.

Foreign tax relief: Foreign-source income is included in taxable income, but relief is granted for tax paid in foreign countries as per DTAA .

Participation exemption: Not applicable.

Holding-company regime: Not applicable.

Tax-based incentives: Available for industries established in economic zones and export-processing zones.

Group relief/fiscal unity: Not applicable.

Small company/alternative tax regimes: Not applicable.

Corporate taxation: compliance

Tax year: 1 July to 30 June, However, a company having foreign parent/subsidiary may change to its accounting year.

Consolidated returns: Not applicable.

Filing and payment: Return to be filed and payment to be made within the 15th day of the seventh month following the end of the income year

Penalties: Penalties apply for late filing or failure to file.

Rulings: Not applicable.

Taxation of individuals

	Rate
	Federal Income Tax
On 1st 300,000/350,000 (1)	0%
Next 100,000	5%
Next 300,000	10%
Next 400,000	15%
Next 500,000	20%
On Balance	25%

1. 300,000 for men under 65 years of age and 350,000 for all others.

Residence: Individuals are resident if they have been present in Bangladesh: a) for 182 days or more in the income year; or b) 90 days or more in the income year having spent 365 days or more in the previous 4 years.

Basis: Resident individuals are taxed on their worldwide income. Non-residents are taxed on income received, deemed to be received, accrued or arisen, or deemed to have accrued or arisen in Bangladesh.

Taxable income: Total income exceeding exemption limit of BDT 300,000 is taxable income. For women and senior citizens (age 65 years or above), the exemption limit is BDT 350,0000.

Capital gains: a) If the capital gain arises on a disposal of assets within 5 years of acquisition, the tax rate is Average Rate with other income. b) If the capital gain arises on a disposal of assets after 5 years of acquisition, the tax rate is 15% or average rate, whichever is lower.

Deductions and allowances: Various expenses are deductible when computing taxable income.

Foreign tax relief: Relief is granted for tax paid in a foreign country under the Double Taxation Avoidance Agreement (DTAA) with the respective foreign country.

Taxation of individuals: compliance

Tax year: 1 July to 30 June

Filing and payment: By 30 November.

Penalties: Penalties apply for late filing or failure to file.

Rulings: Not applicable.

Withholding taxes

Type of Payment	Resident recipients		Non-residents recipients
	Company	Individual	Company	Individual
	Rate (%)	Rate (%)	Rate (%)	Rate (%)
Dividends	20%	10%	20%	30%
Interest on bank deposit	20%	10%	20%	20%
Royalties, Technical services (1)	10%/12%	10%/12%	20%	20%
Capital gains (2)	10%/15%	15%	15%	15%

1. 12% if base amount (higher of contract value or bill or invoice amount or payment) exceeds Taka 2,500,000.
2. a) 10% on profit of a company on sale of shares of listed companies. Fully exempt for individuals.        b) In case of transfer, etc. of property, capital gain tax rates are on location of the property.

Branch remittance tax: Remittance of profit by Branch to Head office is subject to 20% tax deducted at source (TDS/Withholding tax)

Anti-avoidance legislation

Transfer pricing: Formal TP legislation or documentation requirements are based on OECD principles.

Interest restriction: Not applicable.

Controlled foreign companies: Not applicable.

Hybrid mismatches: Not applicable.

Disclosure requirements: Statement of international transactions to be submitted.

Exit taxes: Not applicable.

General anti-avoidance rule: Not applicable.

Digital services tax and Other significant anti-avoidance legislation: Not applicable.

Value-added tax/Goods and services tax

Type of tax: Value-added tax (VAT) applies to supplies of most goods and services and to imports. There is a broad range of exempt supplies and zero-rated supplies (exempt but allowing for deduction of input tax).

Standard rate: 15%.

Reduced rates: 2%, 2.40%, 4%, 5%, 7.50%, 10 % and Fixed Vat amount.

Registration: Businesses must register for VAT where annual taxable supply has exceeded BDT 30 Million. Business having annual supplies exceeding BDT 8 Million but not exceeding BDT 30 Million Taka are required to enlist for Turnover Tax.

Filing and payment: Monthly VAT Return is required to be filed within 15 days of the following month.

Social security contributions

	Employer	Employee
	Rate (%)	Rate (%)
Provident Fund (1)	10%	10%
Band 2	0	0
Band 3	0	0

Employers maintain Provident Fund, Gratuity Scheme and Group Insurance etc for their employees.

Self-employed

Not applicable.

Other taxes

Capital duty: Not applicable.

Immovable property taxes: Holding tax based on the location.

Transfer tax: The transfer of securities by Bangladesh securities dealers is subject to a 0.05% tax deducted at source on the value of transactions.

Stamp duty: Stamp duty applies on total 64 Instruments.

Net wealth/worth tax: Individual net wealth surcharge is imposed at varying rates (10% to 35%) if net wealth exceeds BDT 30 Million.

Inheritance/gift taxes: There are provisions for gift tax. Gifts to spouses and direct descendants are exempt.

Other: In respect of Imports, there are Customs duty, Regulatory duty, VAT, Supplementary duty and Advance Income Tax (AIT).

Tax treaties

Bangladesh has concluded over 30 Double Taxation Avoidance Agreements (DTAA) on income and capital gains.