| Bangladesh Income Tax Rates Bangladesh personal income tax rates for assessment year 2008 - 2009 is progressive up to 25%.
Bangladesh Income Tax Rates for Male Taxpayers - Assessment Year 2008 - 2009
First BDT 165,000 Nil
Next BDT 275,000 10%
Next BDT 325,000 15%
Next BDT 375,000 20%
Rest Amount 25%
Bangladesh Income Tax Rates for Female Taxpayers, Senior Taxpayers of Age 70 Years and Above and Retarded Taxpayers - Assessment Year 2008 - 2009
First BDT 180,000 Nil
Next BDT 275,000 10%
Next BDT 325,000 15%
Next BDT 375,000 20%
Rest Amount 25%
Minimum tax for any individual assessee is BDT 2,000.
Tax rate for nonresident individuals (other than nonresident Bangladeshi) is 25%.
1 USD = 68.87 Bangladeshi Taka (BDT) as of 18 July 2009.
Income tax is one of the main sources of revenue in Bangladesh. It is a progressive tax system. Bangladesh Income tax is imposed on the basis of ability to pay. The more a taxpayer earns the more tax he should pay. This is the basic principle of charging income tax in Bangladesh. The tax system aims at ensuring equity and social justice. Tax rates in Bangladesh also differs between male and female individuals.
Time to submit income tax return: Unless the date is extended, by the 30th day of September next following the income year.
Bangladesh Corporate Tax RatesThe standard rate of corporate tax in Bangladesh is 27.5% in 2008 - 2009 tax year. This is the standard corporate tax rate applicable to publicly traded companies in Bangladesh, a list including tax rates for other corporations are as follows:
Publicly Traded Company 27.5%
Non-publicly Traded Company 37.5%
Bank, Insurance & Financial Company 45%
Mobile Phone Operator Company 45%
If any publicly traded company declares more than 20% dividend, 10% rebate on total tax is allowed.
Time to submit income tax return: By 15th of July next following the income year or, where the 15th of July falls before the expiry of 6 months from the end of the income year, before the expiry of such 6 months.
Advance Payment of Tax
Every taxpayer in Bangladesh is required to pay advance tax in four equal installments falling on 15th September; 15th December; 15th March and 15th June of each year if the latest assessed income exceeds BDT 300,000. Penalty is imposed for default in payment of any installment of advance tax.
Sources of Income in Bangladesh For the purpose of computation of total income and charging tax thereon, sources of income can be classified into 7 categories, which are as follows :
- Salaries
- Interest on securities
- Income from house property
- Income from agriculture
- Income from business or profession
- Capital gains
- Income from other sources.
Who should submit Income Tax Return in Bangladesh?
- If total income of any individual other than female taxpayers, senior taxpayers of 70 years and above and retarded taxpayers during the income year exceeds BDT 165,000.
- If total income of any female taxpayer, senior taxpayer of 70 years and above and retarded taxpayer during the income year exceeds BDT 180,000.
- If any person was assessed for tax during any of the 3 years immediately preceding the income year.
- A person who lives in any city corporation / paurashava / divisional HQ/district HQ and owns a building of more than one storey and having plinth area exceeding 1,600 sq. feet/owns motor car/owns membership of a club registered under VAT Law.
- If any person subscribes a telephone.
- If any person runs a business or profession having trade license.
- Any professional registered as doctor, lawyer, income tax practitioner, Chartered Accountant, Cost & Management Accountant, Engineer, Architect and Surveyor etc.
- Member of a Chamber of Commerce and Industries or a trade Association.
- Any person who participates in a tender.
- A person who has a Taxpayer's Identification Number (TIN).
- Candidate for Union Parishad, Paurashava, City Corporation or Parliament.
Tax Recovery System
In case of non-payment of income tax demand the following measures can be taken against a taxpayer for realization of tax:-
- Imposition of penalty
- Attachment of bank accounts, salary or any other payment.
- Filing of Certificate case to the Special Magistrate.
Consequences of Non-Submission of Return
- Imposition of penalty amounting to 10% of tax on last assessed income subject to a minimum of BDT 1,000
- In case of a continuing default a further penalty of BDT 50.00 for every day of delay.
Income Tax Authorities in Bangladesh
Income Tax Authorities in Bangladesh are:
- National Board of Revenue,
- Director General of Inspection (Tax),
- Commissioner of Taxes (Appeals),
- Commissioner of Taxes (LTU)
- Director General (Training),
- Director General Central Intelligence Cell (CIC),
- Commissioner of Taxes,
- Additional Commissioner of Taxes (Appeal/Inspecting),
- Joint Commissioner of Taxes(Appeal/Inspecting ),
- Deputy Commissioner of Taxes,
- Assistant Commissioner of Taxes,
- Extra Assistant Commissioner of Taxes,
- Inspectors of Taxes.
Tax Withholding Functions
In Bangladesh withholding taxes are usually termed as Tax deduction and collected at source. Under this system both private and public limited companies or any other organization specified by law are legally authorized and bound to withhold taxes at some point of making payment and deposit the same to the Government Exchequer. The taxpayer receives a certificate from the withholding authority and gets credits of tax against assessed tax on the basis of such certificate.
Tax Rebate for Investment Rate of Rebate: Amount of allowable investment is either up to 25% of total income or BDT 500,000 whichever is less. Tax rebate amounts to 10% of allowable investment. Types of investment qualified for the tax rebate are:
- Life insurance premium
- Contribution to deferred annuity
- Contribution to Provident Fund to which Provident Fund Act, 1925 applies
- Self contribution and employer's contribution to Recognized Provident Fund
- Contribution to Super Annuation Fund
- Investment in approved debenture or debenture stock, Stocks or Shares
- Contribution to deposit pension scheme
- Contribution to Benevolent Fund and Group Insurance premium
- Contribution to Zakat Fund (Zakat: Islamic Tax)
- Donation to charitable hospital approved by National Board of Revenue
- Donation to philanthropic or educational institution approved by the Government
- Donation to socioeconomic or cultural development institution established in Bangladesh by Aga Khan Development Network
Assessment Procedures
- For a return submitted under normal scheme, assessment is made after hearing.
- For returns submitted under Universal Self Assessment Scheme, the acknowledgment slip is determined to be an assessment order. Universal Self Assessment is of course subject to audit.
Appeal against the order of DCT
A taxpayer can file an appeal against DCT's order to the Commissioner (Appeals) / Additional or Joint Commissioner of Taxes (Appeals) and to the Taxes Appellate Tribunal against an Appeal order.
Major Areas for Final Settlement of Tax Liability in Bangladesh
Tax deducted at source for the following cases is treated as final discharge of tax liabilities. No additional tax is charged or refund is allowed in the following cases:
- Supply or contract work
- Band rolls of hand made cigarettes
- Import of goods
- Transfer of properties
- Export of manpower
- Real Estate Business
- Export value of garments
- Local shipping business
- Royalty, technical know-how fee
- Insurance agent commission.
- Auction purchase
- Payment on account of survey by surveyor of a general insurance company
- Clearing & forwarding agency commission.
- Transaction by a member of a Stock Exchange.
- Courier business
- Export cash subsidy
Tax Holiday
Tax holiday is allowed for certain industrial undertaking, tourist industry and physical infrastructure facility established between 1st July 2008 to 30th June 2011 in fulfillment of certain conditions.
Bangladesh Value Added Tax (VAT) RatesThe general rate of Value Added Tax (VAT) in Bangladesh is 15%.
- Value Added Tax (VAT) is imposed on goods and services at import stage, manufacturing, wholesale and retails levels;
- A uniform VAT rate of 15% is applicable for both goods and services;
- 15% Value Added Tax (VAT) is applicable for all business or industrial units with an annual turnover of Taka 2 million and above;
- Turnover tax at the rate of 4% is leviable where annual turnover is less than BDT 2 million;
- Value Added Tax is applicable to all domestic products and services with some exemptions;
- Value Added Tax (VAT) is payable at the time of supply of goods and services;
- Tax paid on inputs is creditable / adjustable against output tax;
- Export is VAT exempt;
- Cottage industries (defined as a unit with an annual turnover of less than BDT 2 million and with a capital machinery valued up to BDT 300,000) are exempt from Value Added Tax;
- Tax returns are to be submitted on monthly or quarterly or half yearly basis as notified by the Government.
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