Overview of Bangladesh Income Tax
Who is Subject to Income Tax?
All companies, branch offices, liaison offices, and representatives registered in Bangladesh must file an annual tax return with the National Board of Revenue (NBR).
What Does a Company Need to File?
The annual company tax return includes information about:
- Company income
- Expenses
- Net profit before tax
- Assets and liabilities This return is used to determine tax liability and tax deducted at source.
Tax Liability
The tax owed by a company in Bangladesh varies based on its business activities and legal status. The income tax rates are as follows:
Type of Company | Tax Rate on Profit |
---|---|
Private limited company, non-listed company, non-resident | 35% |
Publicly traded listed company | 25% |
Publicly traded banks, insurance, and non-banking financial institutions | 40% |
Non-publicly traded banks, insurance, and non-banking financial institutions | 42% |
Merchant banks | 37.5% |
Cigarette manufacturing companies | 45% |
Tobacco product manufacturing companies | 45% |
Mobile operator companies | 45% |
- Capital Gains Tax: 15% on capital gains.
- Minimum Tax: 0.3% on gross receipts if normal tax liability is lower.
How to Reduce Tax Liability
Companies can reduce their tax liabilities through various means, including:
- Offsetting taxable losses (carry forward for up to six years)
- Depreciation allowances
- Tax exemptions for newly established industrial undertakings
- Exemptions for the tourism industry
- Exemptions for newly established physical infrastructure
- Benefits for companies operating in Bangladesh Export Processing Zones (BEPZA)
- A 10% tax rebate for public companies after an IPO
- Exemptions on approved provident and gratuity funds
- Rebate on approved Corporate Social Responsibility (CSR) activities
Filing Deadlines
Companies must file their annual tax return by the 15th of the seventh month following the end of their tax year. For example, if the accounting year ends on June 30, the return is due by January 15 of the following year. Extensions may be granted with permission from the Deputy Commissioner of Taxes.
Withholding Taxes
Companies must deduct taxes at source from payments to suppliers, service providers, and employee salaries. This is known as Withholding Tax. Companies are required to file a withholding tax return every six months (in December and June), which includes all payments subject to TDS and copies of treasury challans.
Payroll Taxes
Companies must deduct income tax from employees’ salaries if their taxable income exceeds the threshold. This must be deposited in the government exchequer through a treasury challan, and both TDS and salary amounts should be included in the withholding tax return.
Indirect Tax
The government imposes a Value Added Tax (VAT) of 15% on the final consumer. Companies must register for VAT and deduct VAT at source (VDS) on applicable goods and services, remitting this to the government. VAT returns must detail the VDS amounts deposited.
Contact Us
For comprehensive guidance on the Bangladesh tax system, please contact us.