KPMG Taxation Handbook

kpmg Bangladesh
Taxation Handbook
(Updated to Finance Act 2021)
September 2021
KPMG in Bangladesh Telephone +880 2 2222 86450-2
9 & 5 Mohakhali C/A Fax +880 2 2222 86449
Dhaka 1212, Bangladesh Email dhaka@kpmg.com
Internet www.kpmg.com/bd
About KPMG in Bangladesh
KPMG in Bangladesh is represented by Rahman Rahman Huq, Chartered Accountants (RRH) and
KPMG Advisory Services Limited (KASL).
RRH was established in 1962 by Messrs Rezaur Rahman, M. Saifur Rahman and Tashfin I Huq, all
being members of the Institute of Chartered Accountants in England & Wales (ICAEW). Over the
years, this firm has built a formidable reputation for providing Audit, Tax and Advisory/Consulting
services to national and multinational businesses, public sector corporations and development
organisations. On 1 January 2006, we became a Member Firm of KPMG International, making us
the first “Big 4” Member Firm in Bangladesh. For about a decade prior to that, we were a
Representative Firm of KPMG International.
KPMG Advisory Services Limited was formed in 2019. Wholly owned and managed by partners of
RRH, KASL focuses on selected Advisory and non-regulated services. KASL is a Member Firm of
KPMG International.
Current and recent clients of KPMG in Bangladesh include:
- Grameenphone - Eriell Oil Field Services - Reckitt Benckiser - Cemex

- Banglalink - Weatherford - Unilever - Emirates Cement
- Robi/Axiata - Foster Wheeler - Singer - Tesco
- Alcatel Lucent - WorleyParsons - Bata Shoe - Walmart
- Huawei - Vinarco - Marico - Sainsbury’s
- IBM - Esprat - Nestle - Mustafa Mart
- Microsoft - AusGroup - Syngenta - Maersk
- HP - Eni SpA - Bangladesh Edible Oil - Aramex
- Dell - Cameron - Asian Paints - CMA-CGM Bangladesh
- Siemens - Qualitech - Godrej Shipping
- Ericsson - Summit Power - KAFCO - Trident Shipping
- Samsung - Khulna Power - Linde - Damco
- Standard Chartered - United Power - CEAT - DSV Air & Sea
Bank - Wartsila - Honda - Cathay Pacific
- HSBC - Energypac Power - G4S - Pan Pacific Sonargaon
- Citibank N.A. Generation Ltd. - SGS Hotel
- Eastern Bank Ltd. - Haripur Power - Intertek - UNDP
- Southeast Bank Ltd. - Meghnaghat Power - TUV SUD - icddr,b
- The City Bank Ltd. - NEPC - Avery Dennison - SMC
- Bank Asia Ltd. - Rolls-Royce Power - Youngone - OXFAM
- Chevron - British American - A-Tex - Save the Children, etc.
- Gazprom Tobacco - SML
- Halliburton - Philip Morris - Brandix
- Niko - GSK - Holcim
Currently KPMG in Bangladesh has 5 active partners/directors. Operating from offices in Dhaka
and Chattogram, we employ over 400 professionals. KPMG in Bangladesh, the partners and
personnel who work for it and the processes under which we operate are governed not just by a
strict code of ethics, but also by an elaborate risk management structure. We have an IT wing
manned by professionals with the qualification and experience necessary to meet the diverse
needs of clients.
Our ambition is to continue to recruit some of the best talent entering this profession, train them in
an environment of technical and ethical excellence to meet the highest expectations of clients in
this age of continually evolving multi-dimensional challenges.
Rahman Rahman Huq and KPMG Advisory Services Limited are

entities registered in Bangladesh and members of the KPMG global
organisation of independent member firms affiliated with KPMG Chattogram office address: Tel +880 2 710 704, 710 996
International Limited, a private English company limited by 78 Agrabad C/A (13th floor) Email chittagong@kpmg.com
guarantee. Chittagong, Bangladesh Internet www.kpmg.com/bd
KPMG in Bangladesh Taxation Handbook
(updated to Finance Act 2021)
Table of Contents
1. Preface 1
2. Tax rates 2
2.1 Tax rates for individual, etc. 2
2.2 Corporate tax rates 4
2.3 Reduced rates of Corporate Tax applicable to certain industrial companies 5
2.4 Reduced tax rates applicable to local authority 5
2.5 Capital gains tax 6
2.6 Tax on dividend/remittance of profit 6
2.7 Tax on retained earnings (Section 16G) 7
2.8 Applicability of tax rates 7
2.9 Charge of additional tax (Section 16B) 7
2.10 Charge of tax on the difference of investment, import and export (Section 16H) 7
2.11 Filing of tax return (Section 75) 7
3. Personal income tax 9

3.1 Introduction 9
3.2 Resident 9
3.3 Taxable income 9
3.4 Requirement of twelve-digit Taxpayer's Identification Number (e-TIN) (Section 184A) 9
3.5 Issuance of e-TIN without application and re-registration 11
3.6 Issuance of Temporary Registration Number (TRN) 11
3.7 Universal self-assessment (Section 82BB) 11
3.8 Submission of Statement of Assets and Liability and Lifestyle (Section 80) 12
3.9 Tax Clearance Certificate 12
3.10 Tax rebate on investment 12
3.11 Deemed income 13
3.12 Unexplained and undisclosed investments, properties and cash 14
3.12.1 Unexplained investments–Special tax treatment in respect of investment in securities
(Section 19AAAA) 14
3.12.2 Undisclosed properties – special tax treatment in respect of undisclosed property,
cash, etc. (Section 19AAAAA) 14
3.12.3 Unexplained investments – special tax treatment in respect of investment in building
and apartment (Section 19BBBBB) 16
3.13 Imposition of tax on income of chamber of commerce and industry, trade federation
or any such business organisation 16
4. Corporate tax 17
4.1 Introduction 17
4.2 Resident 17
4.3 Permanent establishment 18
4.4 Taxable income 18
4.5 Income deemed to accrue or arise in Bangladesh 18
4.6 Income year 19
4.7 Allowable expense deductions as per the Income Tax Ordinance 1984 19
4.8 Tax depreciation 19
4.9 Allowable perquisites 20
4.10 Deductions not admissible in certain circumstances (Section 30) 20
© 2021 Rahman Rahman Huq and KPMG Advisory Services Limited are entities registered in Bangladesh and members of the KPMG
global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by i
guarantee. All rights reserved.
4.11 Disallowance under section 30 is taxable even if the company is loss making or
under minimum tax (Section 30B) 21
4.12 Donations 21
4.13 Minimum tax (Section 82C) 22
4.14 Losses 25
4.15 Advance tax payment 25
4.16 Advance tax payment on certain income (Section 68A) 26
4.17 Annual tax return filing and tax payment 26
4.18 Return of withholding tax 26
4.19 Annual Information Return 26
4.20 Concurrent jurisdiction 27
4.21 Assessment 27
4.22 Universal self-assessment scheme 27
4.23 Appeals 27
4.24 Submission of certain returns 28
4.25 Power of search and seizure 28
4.26 Freezing of property 28
5. Tax incentives 29
5.1 Special Economic Zones and Developing Unit 29
5.2 Hi-Tech Park Zone 30
5.3 Partial tax exemption for newly established undertaking 31
5.4 Partial tax exemption for newly established physical Infrastructure facility (Section
46CC) 33
5.5 Tax exemption for Public Private Partnership (PPP) Project 34
5.6 Income from exports 35
5.7 Export Processing Zones 35
5.8 Income from the business of software development or Nationwide
Telecommunication Transmission Network (NTTN) and information technology
enabled services (ITES) 35
5.9 Exemption of capital gains tax from sale of shares of listed companies for non-
resident (Sixth Schedule, Part-A, Para-43) 36
5.10 Exemption of income from Cinema Hall or Cineplex 36
5.11 Exemption of income from production of rice bran oil 37
5.12 Income from production of corn, maize or sugar beet 38
5.13 Exemption from income of export of handicrafts 41
5.14 Income derived from any SME 41
5.15 Donation to any fund established by “Trust of Prime Minister Education Assistance
Act 2012” 41
5.16 Incentives for private sector power generation companies (other than coal based) 41
5.17 Incentives for private sector power generation companies (other than coal based) 41
5.18 Incentives for private sector power generation companies (coal based) 42
5.19 Exemption/reduced tax rate is not allowed in case of failure to file the return within
stipulated time 42
5.20 Agricultural income 42
5.21 Interest on pensioners’ savings certificate 42
5.22 Foreign income by individuals 42
5.23 Dividend income 43
5.24 Gratuity income 43
5.25 Workers Profit Participation Fund income 43
5.26 Certain bond income 43
5.27 Donation to girls’ school/college 43
global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by ii
5.28 Donation to technical and vocation institution 43

5.29 Donation to research and development 43
5.30 Employing disabled person 43
5.31 Income received other than bank interest/dividend by any educational institution 43
5.32 Income received other than bank interest/dividend by any public university, ICAB,
ICMAB and ICSB 44
5.33 Corporate Social Responsibility (CSR) activity to get tax rebate 44
6. Penalty and prosecution for non-compliance 46
7. Voluntary disclosure 48
8. Transfer pricing 49
9. Others 50
9.1 Stay of proceeding in case of pending appeal or reference at Appellate Tribunal or
High Court Division 50
9.2 Decision of ADR 50
9.3 Notice, assessment order and tax form delivered as per section 174 50
9.4 Inclusion of amortisation in Third Schedule 50
9.5 Computation of income of contractor, etc., of an oil company residing out of
Bangladesh (Rule 39) 51
9.6 Tax calendar for company 51
10. Income subject to tax withholding/deduction/collection at source 52
11. International Tax 69

11.1 Double Taxation Avoidance Agreement 69
11.2 Double Tax Relief 69
12. Value Added Tax 70

12.1 Registration or Enlistment Requirements 70
12.2 Coverage of VAT 72
12.3 Type of VAT Rates 73
12.4 VAT Mechanism 75
12.5 Value of taxable supply 81
12.6 Few important matters 82
12.7 VAT Documentations 85
global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by iii
1. Preface
We have prepared this booklet for the guidance of our clients and contacts. This booklet
incorporates many of the important provisions of the Income Tax Ordinance 1984 as
amended up to the Finance Act 2021 and major changes brought in by the Finance Act
2021 in respect of the Value Added Tax and Supplementary Duty Act 2012 and Rules 2016.
The information contained in this booklet is of a general nature and is not intended to
address the circumstances of any particular individual or entity. Although we endeavour to
provide accurate information at the time of preparation, there can of course be no assurance
that such information would continue to be accurate in the future. No one should act on such
information without appropriate professional advice given after an examination of the
particular circumstances. This booklet contains selected aspects of Bangladesh tax
provisions and is not intended to be comprehensive.
We hope you will find this booklet useful.
Adeeb H. Khan
Senior Partner
global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by 1
2. Tax rates
2.1 Tax rates for individual, etc.
Tax is not payable by tax residents on income below Taka 300,000 (for men). The following
tax rates are applicable to resident individual, Hindu undivided family, partnership firm and
non-resident Bangladeshi:
Residents including non-resident Bangladeshi
Total income Tax rate

First Taka 300,000* Nil
Next Taka 100,000 5%
Next Taka 300,000 10%
Next Taka 400,000 15%
Next Taka 500,000 20%
On the balance 25%
*Initial exemption limit for:

— third gender, women and senior citizens aged 65 years or above it is Taka 350,000,
— physically challenged persons it is Taka 450,000, and
— gazetted war-wounded freedom fighters it is Taka 475,000.
In case of parent/legal guardian of a physically challenged person, he/she (only one
assessee if father and mother both are taxpayer) will get a further initial exemption of
Taka 50,000 in addition to above limit.
Please see section 3.2 for the definition of resident.
Non-residents
Non-residents other than Bangladeshi non-residents shall pay tax on the total income at the
rate of 30%.
Minimum tax payable
Minimum tax payable by an assessee is as follows:
Location Minimum tax

Within Dhaka and Chattogram City Corporation Taka 5,000
Any other City Corporation Taka 4,000
Other than City Corporation Taka 3,000
Dividend income
Dividend income received by an individual assessee from companies listed with either/both
exchange(s) in Bangladesh is exempted from tax up to Taka 50,000.
Charge of surcharge
Surcharge is payable by an individual assessee on total tax payable if the total net worth of
the assessee exceeds Taka 30 million in the following manner:
Total net worth Rate

Over Taka 30 million to Taka 100 million or owner of more than 1 motor car 10%
or owner of house property of more than 8,000 square feet size within City
Corporation area
Over Taka 100 million to Taka 200 million 20%
Over Taka 200 million to Taka 500 million 30%
Over Taka 500 million 35%
Rate for owner of small or cottage industry
If an individual is the owner of a small or cottage industry situated in a less or least developed
area, is engaged in manufacturing of products and derives income from such industries then
he will be entitled to a rebate on income derived from such industries at the following rates:
Particulars Rate of rebate

If production during the year is more than 15% Rebate of 5% on tax payable on income
but less than 25% compared to previous year derived from such industries.
If production during the year exceeds 25 % as Rebate of 10% on tax payable on
compared to previous year. income derived from such industries.
Tax rates applicable for owners of motor car (Section 68B)
Tax payable at the time of registration or renewal of fitness certificate in the form of advance
income tax for motor vehicles is:
Type and engine capacity of motor car Tax payable (Taka)

A car or a jeep, not exceeding 1500cc or 75kw 25,000
A car or a jeep, exceeding 1500cc or 75kw but not exceeding 50,000
2000cc or 100kw
2500cc or 125kw
3000cc or 150kw
3500cc or 175 kw
A car or a jeep, exceeding 3500cc or 175kw 200,000
A microbus 30,000
Such advance income tax shall not be collected from government, local government, any
project under government, foreign diplomat, development partner, an educational institute
under MPO, public university, gazetted war-wounded freedom fighter and any institute
which has received a relevant letter from NBR.
If any assessee owns more than one motor vehicle self or jointly, then advance income tax
will be 50% higher for every additional vehicle’s registration. This shall be treated as
advance payment of tax of the assessee. Moreover, such advance tax shall not be
refundable.
In case of registration or fitness renewal of motor car for more than one-year, advance
income tax shall be collected on or before 30 June in every subsequent year.
If any person failed to pay advance tax, aggregate amount i.e. amount of advance income
tax not paid in previous year or years plus amount of advance income tax payable for current
year will need to be paid.
2.2 Corporate tax rates
The rates of tax applicable to companies, banks, insurance and other financial institutions:
Companies Rate
Publicly traded companies i.e. companies listed with any stock exchange in 22.5%
Bangladesh other than banks, insurance companies, merchant banks and other
financial institutions and jute, textile, garment industries, mobile phone operator
companies and cigarette, zarda, bidi, gul or any other tobacco product
manufacturing companies.
[If non-listed companies other than banks, insurance companies, merchant

banks and other financial institutions, jute, textile, garment industries, mobile
phone operator companies and cigarette, zarda, bidi, gul or any other tobacco
product manufacturing companies list at least 20% of their paid up capital
through IPO, they shall receive a rebate of 10% in the year of listing.
One-person company 25%
Non-listed companies including branch companies other than banks, insurance 30%
companies, merchant banks and other financial institutions, jute, textile,
garment industries, mobile phone operator companies and cigarette, zarda,
bidi, gul or any other tobacco product manufacturing companies.
50% of export income is exempt from tax.
However, rebate on income from export business shall not apply to companies
who are enjoying tax exemption or paying tax at the reduced rates as
mentioned in 2.3.]
Banks, insurance and other financial institutions (except merchant banks) if not 40%
publicly listed
Banks, insurance and other financial institutions (except merchant banks) if 37.5%
publicly listed
Merchant banks 37.5%
Cigarette, zarda, bidi, gul or any other tobacco product manufacturing 45%
companies (companies, firms and individuals) irrespective of listing status
Surcharge in addition to above tax is applicable on business income. 2.5%

Mobile phone operator companies if not publicly listed as below 45%
Mobile phone operator companies that convert themselves into a publicly 40%
traded company by transfer of at least 10% shares through stock exchanges,
of which maximum 5% may be through Pre-Initial Public Offering Placement
[If mobile phone operator companies list at least 20% of their paid-up capital
through IPO, they shall receive a rebate of 10% in the year of listing.
Association of persons, any artificial judicial person created by law and other 30%
taxable entities
Cooperative societies registered under Cooperative Society Act, 2001 15%
Private universities, Private medical college, Private dental college, Private 15%
engineering college or Private college engaged in imparting education on
information technology
However, 5% additional tax will be charged from 1 July 2021 if disabled persons are not
provided with proper arrangement for movement at the place of service by school, college,
university and NGO.
On the other hand, 5% tax rebate will be allowed if at least 10% of total employees constitute
disabled person and another rebate of 5% of tax or 75% of salary to third gender employees,
whichever is lower, will be allowed for employing person of third gender amounting to 100
persons or 10% of total employees.
2.3 Reduced rates of Corporate Tax applicable to certain industrial companies

Companies Rate
Textile industries (time extended up to 30 June 2022) 15%
Knit wear and woven garments manufacturer and exporter (time extended up 12%
to assessment year 2021-2022)
Knit wear and woven garments manufacturer and exporter with internationally 10%
recognised factory with ‘green building certification’ (time extended up to
assessment year 2021-2022)
Research institutes at national level, registered under the Trust Act, 1882 or 15%
Societies Registration Act, 1860
Production of pelleted poultry feed, Production of pelleted feed for fish, shrimp
and cattle, Production of seeds marketing of locally produced seeds, cattle
farming, dairy farming, horticulture, frog farming, sericulture, mushroom farming
and floriculture:
 Income up to Taka 1,000,000 3%
 Next Taka 2,000,000 10%
 On the balance amount 15%
Income from fisheries:
 Income up to Taka 1,000,000 nil
 Next Taka 1,000,000 5%
 Next Taka 1,000,000 10%
 On the balance amount 15%
2.4 Reduced tax rates applicable to local authority
25% reduced tax rate will be applicable for following local bodies:
1. WASA (Dhaka, Chattogram, 13. BIWTA

Khulna and Rajshahi) 14. BTRC
2. Bangladesh Civil Aviation 15. BPDB
Authority 16. BREB
3. RAJUK 17. BWAPDA
4. RDA 18. BEPZA
5. KDA 19. Bangladesh Bridge Authority
6. CDA 20. Borendra Multipurpose Development
7. National Housing Authority Authority (Rajshahi)
8. Chattogram Port Authority 21. Bangladesh Hi-Tech Park Authority
9. Mongla Port Authority 22. IDRA
10. Pyra Port Authority 23. Sustainable and Renewable Energy
11. Bangladesh Television Development Authority
12. Bangladesh Betar
2.5 Capital gains tax
2.5.1 Capital gains tax on sale of shares of listed companies
Capital gain from transfer of stocks and shares of public limited companies listed with stock
exchange except listed Govt. securities:
Sl. Particulars Rate

a. For resident companies and firms 10%
b. Capital gain tax of non-resident shareholders (refer to section 5.9) 15%
c. For sponsor shareholders and shareholder directors 5%
d. For resident individual holding at least 10% of the total share capital of the 5%
company
Capital gains tax on sale of stocks and shares of public limited companies listed with stock
exchange in respect of resident individual assessee shall be exempt from tax unless such
residents fall in categories (c) and (d) of above.
2.5.2 Capital gains tax other than sale of shares of listed companies
In the case of a company, income from capital gains will be separated from total income
and tax at 15% is payable on such capital gains regardless of the period of holding of the
asset from the date of its acquisition.
In the case of an assessee other than a company, if the asset is transferred before the
expiry of five years from the date of acquisition, the capital gains will be taxed at the usual
rate applicable to the assessee’s total income including the capital gains. If the asset is
transferred at any time after expiry of five years from the date of its acquisition, the capital
gains will be taxed at the usual rate applicable to the assessee’s total income including the
capital gains or at the rate of 15% on the amount of capital gains whichever of the two is
lower.
2.5.3 Capital gains tax on transfer of entirety of business or undertaking
Capital gain from transfer of business or undertaking shall be taxable at the rate of 15%
during the year when transfer takes place.
Capital gains is computed by reducing consideration or fair value (whichever is higher) by

any expenditure in connection with the transfer and book value of assets less liabilities taken
as on the date of transfer.
2.6 Tax on dividend/remittance of profit
A company paying dividend shall withhold tax at the rate of

— 20% on dividend payable to a non-resident company/fund/trust and resident company,
— 30% on dividend payable to any non-resident other than a company/fund/trust, and
— 10% (subject to furnishing Twelve-Digit Taxpayer’s Identification Number) or 15% on
dividend payable to a resident person other than a company.
If stock dividend declared or distributed by a listed company exceeds the cash dividend in
any income year, 10% tax on the whole amount of stock dividend will be applicable. Such
tax cannot be adjusted with any other tax liability of the company. The provision is also
applicable if any cash dividend is not declared or distributed in the income year.
A branch company shall withhold tax at the rate of 20% while remitting profit to Head Office.
However, in cases where dividend is payable to a shareholder resident in a country with

which Bangladesh has signed a tax treaty, the rate mentioned in the tax treaty will apply
subject to confirmation/certification from NBR.
Further, any distribution from mutual fund or alternative investment fund would be subject
to tax like dividend declared by a company.
2.7 Tax on retained earnings (Section 16G)
If listed company transfers more than 70% of its net profit/income after tax to retained
earnings or any fund, reserve or surplus in an income year, it shall have to pay tax at the
rate of 10% on the total amount transferred. Such tax cannot be adjusted with any other tax
liability of the company.
2.8 Applicability of tax rates
All rates quoted from 2.1 to 2.7 will apply for the assessment year 2021-2022, unless stated
otherwise.
2.9 Charge of additional tax (Section 16B)
Additional tax will be charged to the employer who employs or allows an individual not being
a Bangladeshi citizen to work at their business or profession without prior approval of
Bangladesh Investment Development Authority (BIDA) or any other competent Government
authority. This additional tax is higher of 50% of the tax payable on his income or Taka
500,000.
2.10 Charge of tax on the difference of investment, import and export (Section 16H)
a) Additional tax will be charged to the assessee on the difference between the amount
of import or export as declared in submitted statements and the actual amount paid for
import or received from export, respectively. The additional tax will be 50% of the
difference amount from the actual transaction value irrespective of higher or lower
amount.
b) Additional tax will be charged to the assessee on the difference between the amount
of investment as declared in the submitted statements and the actual amount of
investment made. The additional tax will be 50% of the difference amount if the actual
amount of investment is found to be lower than the amount of investment disclosed in
the statement.
2.11 Filing of tax return (Section 75)
Filing of tax return is compulsory for every person who:

▪ in a fiscal year earns total income from all sources exceeding the minimum income
exemption threshold (refer to section 2.1);
▪ was assessed for tax for any one of the three years immediately preceding that income
year;
▪ is a company, a non-government organisation registered with NGO Affairs Bureau, a
co-operative society, a firm, an association of persons, a shareholder director or
shareholder employee of a company, a partner of a firm, an employee of the

Government or an authority corporation, body or units of the Government who draws
basic salary of Taka 16,000 or more at any time during the income year, an employee
holding an executive or a management position in a business or profession or a Micro
Credit Organisation having licence with Micro Credit Regulatory Authority;
▪ is a non-resident having permanent establishment in Bangladesh;
▪ is subject to tax exemption or lower tax rate except not being an institution established
solely for charitable purpose or a fund;
▪ at any time during the relevant income year fulfils any of the following conditions:
- owns a motor car, owns membership of a club registered under any law governing
value added tax (VAT).
- runs any business or profession having obtained a trade licence from any City
Corporation, municipality or/and operates a bank account;
- has registered with a recognised professional body as a doctor, lawyer, income tax
practitioner, chartered accountant, cost and management accountant, engineer,
architect or surveyor or any other similar profession;
- is a member of a chamber of commerce and industry or trade association;
- runs for an office of any municipality, city corporation or a Member of Parliament;
- participates in a tender floated by the government, semi-government, autonomous
body or local authority;
- serves in the board of directors of a company or group of companies; and
- participates in a shared economic activity by providing motor vehicle, space,
accommodation or any other assets;
- owns any licensed arms.
▪ if a person is required to have Twelve-Digit Taxpayer’s Identification Number under

section 184A.
However, a return of income shall not be mandatory for -
- an educational institution receiving government benefits under Monthly Payment

Oder (MPO); or
- a public university; or
- a fund; or
- a non-resident, not being a non-resident individual, having no permanent
establishment in Bangladesh; or
- a non-resident individual having no fixed base in Bangladesh; or
- any class of persons which the Board, by order in official gazette, exempt from filing
the return; or
- any individual assessee who has no taxable income but who is required to have
Twelve-Digit Taxpayer’s Identification Number under section 184A for selling a land
or obtaining a credit card.
3. Personal income tax

3.1 Introduction
In general, Bangladesh residents are taxed on their worldwide income. Non-residents are
taxed on income earned in Bangladesh irrespective of where the payment is made.
There is no provision for married couples to file joint returns. Returns are to be filed by 30
November for the income year ending 30 June.
Individuals may file returns under universal self-assessment scheme, but the assessing
officers have discretion to scrutinise the returns.
Where total income exceeds Taka 600,000 during the income year for any individual, he is
required to pay advance tax as either 100% of last assessed tax or 75% of current estimated
income tax and pay the outstanding tax (if any) at the time of filing the return. Tax on an
employee’s salary is required to be withheld on a monthly basis by the employer.
3.2 Resident
An individual is treated as a resident of Bangladesh if that person stays in Bangladesh for

— 182 days or more in any income year; or
— 90 days or more in an income year and that person has also previously resided in
Bangladesh for a period of 365 or more days during the four preceding years.
Residence is determined in Bangladesh purely on the period of presence in Bangladesh

irrespective of residency in other countries. Short-term visitors and dependents of foreign
nationals not earning any income in Bangladesh are not taxed in Bangladesh and are not
required to file tax return.
3.3 Taxable income
Taxable income is the total income earned from all sources, excluding exempt income.
Foreign sourced income of a resident is included in his/her taxable income. For non-
residents, only Bangladesh sourced income is included in his/her taxable income.
3.4 Requirement of twelve-digit Taxpayer's Identification Number (e-TIN) (Section 184A)
It has been made compulsory to submit e-TIN certificate, acknowledgement receipt of

income tax return or the tax certificate issued by Deputy Commissioner of Taxes (DCT) at
the time of:
▪ opening a letter of credit for the purpose of import;

▪ submitting an application for the purpose of obtaining an import registration certificate;
▪ renewal of trade licence;
▪ submitting any tender documents;
▪ submitting an application for membership of a club registered under the Companies Act
1994;
▪ issuance or renewal of license or enlistment of a surveyor of general insurance;
▪ registration of land, building or apartment situated within any city corporation deed value
of which exceeds Taka 100,000. Such document shall contain TIN of both the seller and
the purchaser. This provision will not apply in cases of non-resident Bangladeshis;
▪ registration, change of ownership or renewal of fitness of a car, jeep or a microbus;

▪ registration, renewal of fitness or change of ownership of a bus, truck, prime mover,
lorry etc. plying for hire;
▪ sanction of loan exceeding Taka 500,000 to a person by a commercial bank or a leasing
company;
▪ issue of credit card;
▪ issue of practicing license to a doctor, a lawyer, a chartered accountant, a cost and
management accountant, engineer, architect, surveyor or an income tax practitioner;
▪ all sponsor directors at the time of registration of a company (other than non-resident
foreign directors/sponsors);
▪ applying for or renewal of membership of any trade body;
▪ submitting a plan for construction of building for the purpose of obtaining approval from
RAJUK, CDA, KDA, RDA and in any city corporation or paurasava;
▪ issuance of drug license;
▪ applying for connection of gas for commercial use within a city corporation, municipality
or cantonment board;
▪ applying for connection of electricity within a city corporation, municipality or cantonment
board;
▪ registration, change of ownership or renewal of fitness of a motor vehicle;
▪ obtaining the permission or the renewal of permission for the manufacture of bricks by
Deputy Commissioner’s office in a district or Directorate of Environment, as the case
may be;
▪ issuance or renewal of survey certificate of a water vessel including launch, steamer,
fishing trawler, cargo, coaster and dump-barge etc., plying for hire;
▪ registration or renewal of certificate as agent of an insurance company;
▪ parents of the students of English medium school following international curriculum
within City Corporation or in any municipality of a district headquarter;
▪ receiving the salaries by an employee of the government or an authority corporation,
body or units of the government who draws a salary at a scale of grade 10 or above;
▪ receiving any amount from the government under Monthly Payment Order (MPO) if the
amount of payment exceeds Taka 16,000 per month;
▪ receiving any payment which is an income of the payee classifiable under the head of
salaries by any person employed in the management or administrative function or any
supervisory position in the production function;
▪ obtaining or maintaining the agency or the distributorship of a company;
▪ receiving any commission, fee or other sum in relation to money transfer through mobile
banking or other electronic means or in relation to the recharge of mobile phone
account;
▪ receiving any payment by a resident from a company against any advisory or
consultancy service, catering, service, event management service, supply of manpower
or providing security service;
▪ submitting a bill of entry for import into or export from Bangladesh;
▪ participates in shared economic activities by providing motor vehicle, space,
accommodation or any other assets;
▪ releasing overseas grants to a registered NGO or a Micro Credit Organisation having
licence with Micro Credit Regulatory Authority;
▪ participating in any election in upazila, paurasava, zilla parishad, city corporation or
Jatiya Sangsad;
▪ obtaining or maintaining a license for arms;
▪ purchasing savings instruments (Sanchayapatra) exceeding Taka 200,000;

▪ opening of postal savings accounts exceeding Taka 200,000;
▪ obtaining registration of co-operative society.
3.5 Issuance of e-TIN without application and re-registration
▪ Twelve-digit Taxpayer’s Identification Number (e-TIN) may be issued without any

application where any income tax authority has found a person having taxable income
during the year and has failed to apply for TIN.
▪ Board may direct any person having a TIN to furnish such information or documents for
the purpose of re-registration and thereafter issue a new twelve-digit Taxpayer’s
Identification Number.
3.6 Issuance of Temporary Registration Number (TRN)
Temporary Registration Number (TRN) may be given to a person who has been found
having taxable income in any year and has failed to apply for Taxpayer's Identification
Number (TIN) under section 184B.
3.7 Universal self-assessment (Section 82BB)
Where an assessee files a return of income mentioning twelve-digit Taxpayer's Identification

Number (TIN) in compliance with the conditions and within the time specified and pays tax
on the basis of the tax return, tax authority will issue an acknowledgment of receipt of the
return and such acknowledgment shall be deemed as an order of assessment by the DCT.
Upon receipt of an income tax return, the DCT shall compute the total income after making
necessary adjustments of any arithmetical accuracy and incorrect claim. He shall determine
tax liability taking into account of refundable tax claimed including any tax deducted at
source, any tax collected at source and any advance tax paid.
After processing the submitted tax return, the DCT shall send a notice to the assessee
communicating the difference of computation of income, tax, refund or other related
particulars with opportunity to justify his position in writing and to file an amended return
specifying time limit in the notice. If the assessee files an amended return properly, the DCT
shall send a letter of acceptance within 90 days. In case the assessee does not respond to
the notice, the DCT shall send a demand notice within 9 months specifying total income and
tax payable or refundable.
After filing the return, if the assessee finds any unintentional mistake resulting in less tax
liability has been paid or computed, he may file an amended return with a written statement
mentioning the reason and paying tax in accordance with the amended return. An interest
at the rate of 2% will be applicable for the tax that was paid or computed less. However,
amended tax return cannot be filed after the expiry of 180 days from the date of the filing
the original return or after the original return has been selected for audit.
A return of income filed under universal self-assessment shall not be selected for audit
where such return except the return of income of a financial institution shows at least 15%
higher income than the income assessed or shown in the return of immediately preceding
assessment year and such return:
— is accompanied by corroborative evidence in support of any income exempted from tax;
— is accompanied by a copy of bank statement or account statement, as the case may

be, in support of any sum or aggregate of sums of loan exceeding Taka 500,000;
— does not show receipt of gift during the year;
— does not show any income chargeable to tax at a rate reduced under Section 44; or
— does not show or result in any refund.
No question regarding the source of investment shall be raised, if a new assessee shows
income of at least 20% of the capital invested in a business or profession and shows income
which exceeds the tax exemption threshold. However, the initial capital investment or any
fraction thereof shall not be transferred within five years from the end of the income year.
Time limitation for disposal of universal self-assessment cases is two years from the end of
assessment year in which the income was first assessable.
3.8 Submission of Statement of Assets and Liabilities and Lifestyle (Section 80)
1. It is mandatory for an individual assessee, being resident Bangladeshi to submit the

statement of assets and liabilities, if he
a) has a gross wealth over Taka 4 million; or
b) owns a motor car; or
c) has made an investment in a house property or an apartment in the city corporation
area.
2. Every individual assessee can voluntarily submit assets and liabilities statements.
3. Non-resident Bangladeshi and non-Bangladeshi shall submit the assets and liabilities
statements only in respect of assets located in Bangladesh.
4. Every individual assessee, whose total income exceeds Taka 400,000 shall submit a
statement of expenses relating to lifestyle.
5. Every individual assessee, being a shareholder director of a company, shall submit,

irrespective of the total income, a statement of expenses relating to lifestyle
3.9 Tax Clearance Certificate
Every expatriate employed in Bangladesh is required to obtain a Tax Clearance Certificate

from the concerned DCT. This certificate is required to be produced as an evidence of tax
payment/exemption at the port of departure from Bangladesh.
3.10 Tax rebate on investment
An assessee shall be entitled to a rebate from the amount of tax payable if he/she invests
during the income year in the following items, namely:
a) life insurance premium
b) contribution to approved Provident Fund (both by the employee and employer)
c) contribution to deposit pension scheme amounting to not exceeding Taka 60,000
sponsored by a scheduled bank or a financial institution
d) donation to a national level institution set up in memory of the “Liberation War”
e) donation to a national level institution set up in memory of “Father of the Nation”
f) donation to Prime Minister’s Higher Education Fund
g) donation to Aga Khan Development network/Asiatic Society/CRP/Dhaka Ahsania

Mission Cancer Hospital/icddr,b
h) donation to Zakat Fund/charitable fund established by or under Zakat Fund
i) any sum invested in Bangladesh Government Treasury Bond and Sanchayapatra,
stocks and shares of listed companies, mutual funds and debentures listed with any
stock exchange in Bangladesh
Allowable limit of investment tax rebate is as follows:
Total income Investment tax rebate on eligible amount*

Up to Taka 1.5 million 15%
Over Taka 1.5 million 10%
*Eligible amount is the lowest of the following:

a) Actual investment; or
b) 25% of total income; or
c) Taka 10 million
3.11 Deemed income
Items of deemed incomes are contained in section 19 of the Income Tax Ordinance 1984.
Major instances of deemed income are discussed below:
▪ House rent
If rent free accommodation is provided to the employee, the rental value or 25% of the
basic salary, whichever is less, is included in income. If accommodation is provided at
a concessional rate, the actual payment by employee is excluded from the above. Tax
exempted house rent receivable in cash is Taka 25,000 per month or 50% of basic
salary, whichever is lower.
▪ Conveyance allowance
Tax exempt conveyance allowance receivable in cash is a maximum of Taka 30,000
per annum. If the employer provides conveyance for personal or private use, an amount
equal to 5% of the employee’s basic salary or Taka 60,000, whichever is higher, is
added with total income.
▪ Loan
Any amount of loan or gift exceeding Taka 500,000 received other than through bank
transfer by an assessee, being an individual, shall be treated as income under the head
‘Income from Other Sources’ in the year it was received.
When abovementioned loan or gift shown as income is subsequently repaid or settled,

such repaid or settled amount will be deducted from the total income of that income
year.
Bank transfer refers to transfer from the account of the giver to the account of the
receiver and such accounts are maintained in a bank or a financial institution legally
authorised to operate accounts.
▪ Medical expenses:
Where any amount is received or receivable by the employee by way of hospitalisation,

medical expenses or medical allowance, the amount so receivable or received exceeds
10% of basic salary or Taka 120,000 annually, whichever is less, shall be included in
his income.
In case of an employee being a person with disability, the medical expense exceeding
Taka 1,000,000 shall be include in his total income.
3.12 Unexplained and undisclosed investments, properties and cash
3.12.1 Unexplained investments–Special tax treatment in respect of investment in securities

(Section 19AAAA)
No question shall be raised by authorities as to the source of amounts invested by individual

assessee in stocks, shares, mutual fund units, bonds, debentures and other securities
issued by listed companies and approved by Bangladesh Securities and Exchange
Commission and tradable government securities and bonds, if the individual assessee pays
25% tax on such investments subject to the following conditions:
— the investment is to be made between 1 July 2021 and 30 June 2022;
— 25% tax is to be paid within 30 days of making the investment;
— 5% penalty shall be payable on computed tax;
— investment to be maintained for at least one year, otherwise 10% penalty is to be paid
on such withdrawn amount; and
— this opportunity will not apply if any proceeding has been initiated under any other law
on or before the day of making such investment.
3.12.2 Undisclosed properties – special tax treatment in respect of undisclosed property,

cash, etc. (Section 19AAAAA)
No question will be raised over the source of fund of certain previously undisclosed
investments in land, building, cash and savings instrument if an individual assessee pays
before the submission of return or revised return of income during the period between the 1
July 2021 and 30 June 2022 (both days inclusive), tax at the rates specified in the following
tables:
Sl. Table 1. Description of the property (land) Rate of tax per

square meter
A. Gulshan Model Town, Banani, Baridhara, Motijheel Taka 20,000
Commercial Area and Dilkusha Commercial Area of Dhaka
B. Dhanmandi Residential Area, Defence Officers Housing Taka 15,500
Society (DOHS), Mahakhali, Lalmatia Housing Society,
Uttara Model Town, Bashundhara Residential Area, Dhaka
Cantonment, Sidheshwary, Kawran Bazar, Bijaynagar,
Wari, Segunbagicha, Nikunja of Dhaka, and Panchlaish,
Khulshi, Agrabad and Nasirabad Area of Chattogram
C. Any City Corporation other than area mentioned in A and B Taka 5,000
above
D. Land situated in the area of a Paurasabha or any district Taka 1,500
headquarters
E. Other area Taka 500
Rate of tax per square

meter
Sl. Table 2. Description of the property Up to 200 More than
(building) square 200 square
meter meter
A. Gulshan Model Town, Banani, Baridhara, Taka 4,000 Taka 6,000
Motijheel Commercial Area and Dilkusha
Commercial Area of Dhaka
B. Dhanmandi Residential Area, Defence Officers Taka 3,000 Taka 3,500
Housing Society (DOHS), Mahakhali, Lalmatia
Housing Society, Uttara Model Town,
Bashundhara Residential Area, Dhaka
Cantonment, Sidheshwary, Kawran Bazar,
Banasree, Bijaynagar, Wari, Segunbagicha,
Nikunja of Dhaka, and Panchlaish, Khulshi,
Agrabad and Nasirabad Area of Chattogram
Rate of tax per square meter

Sl. Table 3. Description of the Up to 120 Up to 200 More than
property (building) square square 200 square
meter meter meter
A. Any City Corporation other than Taka 700 Taka 850 Taka 1,300
area mentioned in A and B
above in Table 2
B. Pourashava or any district Taka 300 Taka 450 Taka 600
headquarters
C. Other area Taka 200 Taka 300 Taka 500
Sl. Table 4. Description of the property Rate of tax

A. Cash, bank deposits, financial schemes and instruments, all 25% of the
kinds of deposits or saving deposits, savings instruments or total amount
certificates
5% penalty shall be payable on computed tax;
This opportunity will not apply if any proceeding has been initiated under any other law on
or before the day of submission of return or revised return.
3.12.3 New industrial undertaking - Special Tax treatment in respect of investment (Section
19AAAAAA)
No question shall be raised by authorities as to the source of amounts invested by individual

assessee in new industrial undertaking during the period between the 1 July 2021 and 30
June 2022 (both days inclusive), if the individual assessee pays 10% tax on such investment
on or before 30 June 2022.
3.12.4 Unexplained investments – special tax treatment in respect of investment in building

and apartment (Section 19BBBBB)
Any sum invested by any person in the construction/purchase of any building/apartment

shall be deemed to have been explained if tax is paid at following rates:
Tax per square meter

Sl. Area Up to 200 More than 200
square meter square meter
A. Gulshan Model Town, Banani, Baridhara, Taka 4,000 Taka 5,000
Motijheel Commercial Area and Dilkusha
Commercial Area
B. Dhanmondi Residential Area, Defence Officers Taka 3,000 Taka 3,500
Housing Society (DOHS), Mohakhali, Lalmatia
Housing Society, Uttara Model Town,
Bashundhara Residential Area, Dhaka
Cantonment, Kawran Bazar, Bijoynagar,
Segunbagicha and Nikunja of Dhaka and
Panchlaish, Khulshi, Agrabad and Nasirabad of
Chattogram
Tax per square meter

Area Up to 120 Up to 200 More than 200
square meter square meter square meter
C. Any City Corporation other Taka 800 Taka 1,000 Taka 1,500
than area mentioned in A and
B above
D. Pourashava or any district Taka 300 Taka 500 Taka 700
headquarters
E. Other area Taka 200 Taka 300 Taka 500
The rates will be 20% higher if the assessee makes investment in two or more
buildings/apartments or already has any building or apartment in any City Corporation.
Furthermore, the rate of tax will be 100% higher if for the income:
(a) notice has been issued before submission of return for concealment or escaped
assessment;
(b) notice has been issued before submission of return to furnish information; and
(c) proceeding has been initiated before submission of return for any noncompliance or
providing false statement or false information.
However, the above will not be applicable rather under section 164, 165 and 166 if the
source of income is:
(a) derived from any criminal activities; or

(b) not derived from any legitimate source.
3.13 Imposition of tax on income of chamber of commerce and industry, trade federation
or any such business organisation
Any income derived from any source other than income from business, and interest income
of government approved chambers of commerce and industry, trade federation, industry
and trade cooperative etc. shall not fall under scope of tax liability.
4. Corporate tax
4.1 Introduction
Every company is required to obtain an e-TIN to receive distinctive numbers. Companies

have to file their tax returns within Tax Day. The filing date may be extended up to two
months upon application and further extension up to another two months can be
obtained from the tax authorities upon further application. The return has to be
accompanied with audited statement of accounts, computation of total income along with
supporting schedules, for example depreciation schedule as per tax law, statement of
profit/loss on sale of fixed assets, excess perquisite calculation statements, etc. An
assessing officer will verify the filed return and may ask for information, explanation and
evidences of claims made by an assessee where required. Based on this, the officer may
re-compute the total income and tax payable by the assessee and pass an order of
assessment and communicate the order to assessee.
Company means a company incorporated under the Companies Act in Bangladesh and
includes:
- A body corporate established or constituted by or under any law in force

- Any nationalised bank or industrial or commercial organisation
- Any association or combination of persons, if any of such persons are registered as a
company
- An association or body incorporated by or under any laws of a country outside
Bangladesh
- Any foreign association or body which NBR declares to be a company.
*Tax Day means in case of company the 15th day of the seventh month following the end of
the income year or 15th September following the end of the income year where said 15th
day falls before the 15th September.
Example:
Income year end Tax day

31 December 15 September
31 March 15 October
30 June 15 January
30 September 15 September
4.2 Resident
In general, a company which is incorporated in Bangladesh will be treated as a resident for

tax purposes. Any company, trust, fund or an entity whose control and management are
situated wholly in Bangladesh will also be treated as a resident for tax purposes. A local
authority and every other artificial juridical person will also be treated as resident.
4.3 Permanent establishment
“Permanent Establishment” (PE) in relation to income from business or profession, means

a place or activity through which the business or profession of a person is wholly or partly
carried on, and includes:
(i) a place of management;

(ii) a branch;
(iii) an agency;
(iv) an office;
(v) a warehouse;
(vi) a factory;
(vii) a workshop;
(viii) a mine, oil or gas well, quarry or any other place of exploration, exploitation or
extraction of natural resources
(ix) a farm or plantation;
(x) a building site, a construction, assembly or installation project or supervisory activities
in connection therewith;
(xi) the furnishing of services, including consultancy services, by a person through
employees or other personnel engaged by the person for such purpose, if activities of
that nature continue (for the same or a connected project) in Bangladesh; and
(xii) any associated entity or person (hereinafter referred to as “Person A”) that is
commercially dependent on a non-resident person where the associated entity or
Person A carries out any activity in Bangladesh in connection with any sale made in
Bangladesh by the non-resident person.
4.4 Taxable income
Tax is imposed on total income from all sources after taking deduction for allowable
expenses. Sales revenue, fees, commissions, realised exchange gains, rents, dividends
and interest received, provisions and trading liabilities not paid within three years as well as
inadmissible expenses are included in taxable income. All expenses, including realised
exchange losses and tax depreciation incurred in earning such income are allowable as
deductions.
Foreign sourced income of companies resident in Bangladesh is included in taxable income

but credit is given for tax paid outside Bangladesh. Foreign source income of a non-resident
company is not taxed in Bangladesh unless such income is brought into Bangladesh.
Where a company not listed with a stock exchange, receives its paid up capital by issuing
shares in an income year, the amount so received in any mode other than by crossed
cheque or bank transfer, shall be deemed to be the income of the company from ‘Income
from Other Sources’ for that income year. However, capital contribution through land
transfer (non-cash contribution) is acceptable.
4.5 Income deemed to accrue or arise in Bangladesh
Any income from the below sources will be considered within the scope of total income of
an assessee:
(a) income from any permanent establishment in Bangladesh;
(b) income from any property, asset, right or other source of income, including intangible
property, in Bangladesh;
(c) income from any transfer of any assets situated in Bangladesh;
(d) income from any sale of any goods or services by any electronic means to purchasers
in Bangladesh; and
(e) income from any intangible property used in Bangladesh.
Below is the explanation for this section:
(a) the shares of any company which is a resident in Bangladesh shall be deemed to be
property in Bangladesh;
(b) intangible property shall be deemed to be property in Bangladesh if it is
- registered in Bangladesh; or
- owned by a person that is not a resident of Bangladesh but has a permanent
establishment in Bangladesh to which the intangible property is attributed;
(c) transfer of shares of non-resident company will be treated as transfer of asset in
Bangladesh to the extent it is attributable to the value of any assets in Bangladesh.
4.6 Income year
Entities other than banks, insurance companies or financial institution (and subsidiaries
thereof) are required to have their accounting year, for tax filing purposes, as July to June.
Banks, insurance companies or financial institution (and subsidiaries thereof) are required
to have their accounting year, for tax filing purposes, as January to December.
DCT may allow a different financial year for an entity which is a subsidiary or holding
company or a branch or liaison office of a parent company incorporated outside Bangladesh
if such entity is required to follow a different accounting year for the purpose of consolidation.
4.7 Allowable expense deductions as per the Income Tax Ordinance 1984
All expenses relating to the business operations of a company and incurred during the
relevant income year are allowed as deductions. The cost of free samples and
entertainment expenses are allowed as deductions at prescribed rates based on turnover
and profit respectively or on the actual amounts, whichever are lower. Provision for bad
debts is not allowed.
Specific provisions for accrued expenses in the relevant income year are allowed as
deductions. Prepaid expenses can be carried forward and allowed as a deduction in the
relevant accounting year.
Liabilities for expenses which remain unpaid for three years after the income year in which
they were accrued are added with the total income in the fourth year. However, the liability
amount would be allowed as a deduction in the year when the payments are made.
4.8 Tax depreciation
Tax depreciation on fixed assets of the company (except on cost of land) is allowed at
prescribed rates as per Third Schedule of the Income Tax Ordinance 1984.
There will be no limit for allowing tax depreciation of a bus or minibus transporting the
students and teachers in case of educational institute or employees of the business or
profession.
Amortisation of license fee is now allowed as an admissible expense for any company
engaged in providing specialised services, if such licence is integral to the operation of the
company.
4.9 Allowable perquisites
Perquisite has been defined as follows:
Perquisite means -
(i) Any payment made to an employee by an employer in the form of cash or in any other
form excluding basic salary, festival bonus, incentive bonus, arrear salary, advance
salary, leave encashment and overtime, and
(ii) Any benefit, called by whatever name, provided to an employee by an employer,

whether convertible into money or not; other than contribution to a recognised provident
fund, approved pension fund, approved gratuity fund and approved superannuation
fund.
Provided that the provision of this clause shall not be applicable to an employer where
perquisites were paid to an employee in pursuance of any Government decision published
in the official Gazette to implement the recommendation of a Wage Board Constituted by
the Government.
Limit of allowable perquisites has been fixed at Taka 550,000 per employee. The value of
perquisites paid/provided to an employee in excess of Taka 550,000 in an assessment year
shall be disallowed in company's assessment.
4.10 Deductions not admissible in certain circumstances (Section 30)
Certain payments are not allowable for tax purposes as detailed below:
(i) Payment of salaries if tax is not deducted;

(ii) Salary payment made to any employee who does not have TIN number (if it is
required by law);
(iii) Salary payment after Tax Day to an employee if the employee is required to file the
return of income but fails to file the same on or before the Tax Day or the approved
extended date;
(iv) Salary payment to an employee for whom the statement under section 108A was not
provided;
(v) Head office expenses or intra-group expense debited in excess of the 10% of net
profit disclosed in the statement of accounts;
(vi) Payments of royalty, technical know-how fee and technical assistance fee in excess
of 10% for first three years and 8% for subsequent years of net profit from business
or profession, excluding any profit or income of subsidiary or associate or joint
venture disclosed in the statement of accounts;
(vii) Any payment by way of salary or remuneration made otherwise than by bank transfer
by a person to an employee having monthly gross salary of Taka 20,000 or more;
(viii) any payment exceeding Taka 500,000 paid by a person on account of purchase of
raw materials otherwise than by bank transfer;
(ix) Any expenditure by way of incentive bonus exceeding 10% in aggregate of the net
profit disclosed in the statement of accounts;
(x) Any expenditure by way of overseas travelling exceeding 0.50% of the disclosed
business turnover;
(xi) any payment by way of commission paid or discount made to its shareholder director
by a company;
(xii) any payment by a person exceeding Taka 50,000 or more, otherwise than by bank
transfer excluding
- salary or remuneration made to any employee, without prejudice to an obligation
referred to in clause (vii);
- payment for the purchase of raw materials;
- any payment for government obligation i.e. municipal tax, payment for electricity,
WASA and gas.
(xiii) any payment by way of any rent of any property, whether used for commercial or
residential purposes, otherwise than by a bank transfer; and
(xiv) Any expenditure by way of promotional expenses exceeding 0.50% of the disclosed
turnover. Promotional expense is defined as “any expenditure incurred for giving any
benefits to any person both in cash and non-cash for the purpose of business
promotion.
“Bank transfer” include transfer of money by crossed cheque, mobile financial services or
any other digital means approved by the Bangladesh Bank.
Provisions of section 30 shall apply for insurance business as well in allowing management
expenses or any other expenses under Fourth Schedule of tax ordinance.
4.11 Disallowance under section 30 is taxable even if the company is loss making or under
minimum tax (Section 30B)
Any expenses disallowed under section 30 shall be treated separately as “Income from
Business or Profession” and the tax shall be payable thereon at the regular rate. It is
applicable irrespective of 82C business and any loss or profit computed under regular
“Income from Business or Profession”.
4.12 Donations
Any sums paid by an assessee as donation to philanthropic or educational institutions

(especially girls’ school/college, technical and vocational training institutes) which are
approved by the Government for such purposes and national level institution engaged in the
Research and Development (R&D) of agriculture, science, technology and industrial
development are exempted from tax. Such institutions shall have to apply to National Board
of Revenue for obtaining approval.
4.13 Minimum tax (Section 82C)
As per section 82C, minimum tax would be higher of:
▪ withholding tax on certain sources of income (refer to section 4.13.1 below); and
▪ minimum tax calculated on the basis of overall gross receipts regardless of sources of
income (refer to section 4.13.2 below).
4.13.1 Minimum tax based on withholding tax of certain sources
As per new 82C minimum tax, sources of income have been divided into three broad
categories for tax computation purpose considering the concept of minimum tax.
a) Tax deducted or collected at source would be minimum tax for 25 sources of income
as follows:
Sl. Section Details Withholding tax rate

1 52 Supply of goods/execution of contract Up to 7%
2 52A Royalty fee, franchise, technical know- 10% or 12%
how, etc.
3 Sl. no. 1 Advisory or consultancy service 10% or 12%
of 52AA
Sl. no. 2 Professional service, technical services 10% or 12%
of 52AA fee or technical assistance fee
Sl. no. Wheeling charge for electricity 2% or 3%
13A of transmission
52AA
4 52AAA Commission from C&F Agent 10%
5 52B Cigarette manufacturer 10%
6 52JJ Tax collection from travel agent 0.30%
7 52N Sale of rental power 6%
8 52O Foreign technician salary of diamond 5%
cutting industry
9 52R IGW and ICX for international call 1.5% and 7.5%
10 53 Imported goods (excluding industrial 0% to 20% or Taka 500
undertaking except an industrial per ton based on H.S.
undertaking engaged in producing Codes
cement, iron, or iron product, ferro alloy
product, perfume and toilet waters as raw
material for own consumption)
11 53AA Shipping business of a resident 5% or 3%
12 53B Manpower export 10%
13 53BB Export of certain items 0.5%
14 53BBB Collection of tax from member of stock 0.05% or 10%
exchange
15 53BBBB Export of any other goods 0.5%
16 53C Auction purchase / sale of tea through 10% / 1%
auction
17 53CCC Income from courier business of non- 15%
resident
Sl. Section Details Withholding tax rate

18 53E Commission, discount, fees etc. 10%, 1.5%, 3% and
5%.
5% and 3% rates are
applicable on the
difference between
selling price to
distributor and retail
price
19 53EE Commission/remuneration of agent of 10%
foreign buyer
20 53FF Real estate/land development business - Land 3% or 5%
- Residential building
Taka 300 to Taka
1,600 per square
meter
- Commercial building
Taka 1,200 to Taka
6,500 per square
meter
21 53G Insurance agent 5%
22 53GG Payment to surveyor of insurance 10%
company
23 53M Transfer of securities or mutual fund units 5%
by Sponsor shareholders
24 53N Transfer of share of shareholder of stock 15%
exchange
25 55 Winning lottery 20%
Income from above sources will firstly be computed on regular basis as per provision
of ITO 1984 and the assessee’s regular income tax rate would be applied on such
taxable income. If such regular tax liability is higher than the withholding tax deducted
from these sources of income, the regular tax liability would be payable after adjusting
withholding tax deducted at source.
However, if regular tax liability of those sources is lower or nil compared to withholding
tax on those sources, such withholding tax on those sources would be considered as
final and minimum tax for those sources of income. In such case, if those sources of
income have taxable loss, such loss cannot be set off against the income of other
sources of income and vice-versa.
Also note that tax deducted/collected from the following sources shall not be the
minimum tax for the purpose of above calculation:
i) tax collected under section 52 from the following persons:

- a contractor of an oil company or a subcontractor to the contractor of an oil
company as may be prescribed;
- an oil marketing company and its dealer or agent excluding petrol pump
station;
- any company engaged in oil refinery; and
- any company engaged in gas transmission or gas distribution.
ii) tax deducted under section 53 from import of goods by an industrial undertaking
except an industrial undertaking engaged in producing cement, iron, or iron
product, ferro alloy product, perfume and toilet waters as raw materials for its own
consumption.
iii) tax deducted under sections 53F(1)(a) and (b)
b) Withholding tax deducted from the following 6 sources of income will be considered
as final tax liability considering the rate of withholding tax would be their applicable
tax rate:
Sl. Section Source of income Rate of tax

1 52C Compensation against acquisition of 6% and 3%
property
2 52D Interest on savings instrument 10%
3 53DDD Export cash subsidy 10%
4 53F(1)(c) Interest on savings deposits and fixed 10% and 5%
and 2 deposits
5 53H Transfer of property less cost of Depending on location
acquisition and square meter
6 53P Any sum paid by real estate developer 15%
to landowner
c) For any other sources of income except those mentioned in (a) and (b) above, income
would be determined following the provisions of ITO 1984.
4.13.2 Minimum tax based on overall gross receipts
Every companies and firms (having gross receipts of more than Taka 5 million) and
individuals (having gross receipts of more than Taka 30 million) shall be liable to pay
minimum tax based on gross receipts as mentioned below:
Sl. Classes of assessee Rate of minimum tax

1 Manufacturer of cigarette, bidi, chewing tobacco, 1% of the gross receipts
smokeless tobacco or any other tobacco products
2 Mobile phone operator 2% of the gross receipts
3 Industrial undertaking engaged in manufacturing of 0.10% of the gross receipts
goods for first 3 years of commercial operations
4 Individuals other than mobile operator and tobacco 0.25% of the gross receipts
manufacturer
5 Any other cases 0.60% of the gross receipts
If an assessee has income from any source that is exempt of tax or is subject to reduced
tax rate, the minimum tax rate on gross receipts shall be computed as a summation of:
i) Minimum tax based on gross receipts from regular sources by applying the rate as
mentioned in the above table.
ii) Minimum tax based on gross receipts from sources which enjoys exemption or reduced
tax rate by applying the rate in the above table as reduced in proportion to the
exemption of tax or the reduction of rate of tax.
iii) Minimum tax shall be the aggregate of the amounts calculated above.
4.13.3 Other major provisions of section 82C
▪ Books of accounts shall be maintained in the regular manner in accordance with the
provisions of section 35 of ITO 1984 for the sources of income for which minimum tax
is applicable.
▪ Minimum tax under section 82C shall not be refunded, nor shall be adjusted against
refund due for earlier year or years or refund due for the assessment year from any
source.
▪ Where any surcharge, additional interest, additional amount etc. is payable under
provisions of ITO 1984, it shall be payable in addition to the minimum tax.
▪ Where the regular tax calculated for any assessment year is higher than the minimum
tax under section 82C, regular tax shall be payable.
▪ Where tax has been mistakenly deducted and collected in excess or deficit of the proper
due amount, minimum tax under this section shall be computed based on the proper
due amount of deduction or collection and provisions of this section shall apply
accordingly.
4.14 Losses
Losses can be carried forward for a maximum period of six years but cannot be carried back.
Unabsorbed tax depreciation can be carried forward indefinitely.
Foreign sourced losses of a Bangladesh entity cannot be offset against the Bangladesh
profits of that entity. Moreover, any losses of any head of income cannot be set off against
any income from manufacturing of cigarette, bidi, zarda, chewing tobacco, gul, or any other
smokeless tobacco products.
Any loss in respect of any speculation business or any loss under the head capital gains
shall be set off only against any income in respect of speculation business or any income
under the head capital gains.
Any loss from any source, income of which is exempted from tax or income of which is taxed
at a reduced rate, shall not be set off against any income from any source.
As with trading losses, unabsorbed capital losses can only be carried forward for up to six
years.
Losses of association of person (AoP) will only be set-off against income of AoP. Members
of AoP cannot carry forward and set-off losses of AoP against their income.
4.15 Advance tax payment
Advance tax payment is required by an assessee on the basis of their last assessed income
or provisionally assessed income if their total income exceeds Taka 600,000. New
assessees will also be required to pay advance tax if their estimated income is likely to
exceed Taka 600,000. Here, total income excludes agricultural income and capital gain
except gain from transfer of share of a company listed with a stock exchange.
Advance tax is to be paid in four equal instalments on 15 September, 15 December, 15

March and 15 June of the financial year for which the tax is payable.
In case of failing to pay advance tax, simple interest at the rate of 10% per annum shall be
charged on the amount by which the tax as so paid falls short of 75% of the assessed tax.
However, such interest rate will be 50% higher if the return is not filed on or before the Tax
Day.
4.16 Advance tax payment on certain income (Section 68A)
Manufacturer of cigarettes shall pay advance tax at the rate 3% on net sales price every
month in addition with quarterly advance tax payment. However, such tax shall be
adjustable against the quarterly advance tax.
For such advance tax purpose, net sales shall be A-B. Where, A = Gross sales and B = VAT
and SD (if any) on such gross sales.
4.17 Annual tax return filing and tax payment
Filing of tax return within due date and payment of due taxes have been made compulsory
for any organisation who has obtained a Taxpayers Identification Number (TIN). It is also
compulsory for all companies, businesses and professional firms, joint ventures, all
registered NGOs, universities and educational institutions run commercially to file tax
returns and pay taxes within due dates. For the list of tax return filing, please see section
2.11.
Submission of computation sheet along with audited statement of accounts has been made
mandatory showing how the income has been arrived in the tax return.
4.18 Return of withholding tax
Every person shall file return of withholding tax collected or deducted on a semi-annual
basis accompanied by withholding statement along with copy of treasury challans or
payment orders.
Such return shall be filed by the following dates:
i) First return: by 31 January of the year for the periods from July to December; and
ii) Second return: by 31 July of the year for the periods from January to June.
The time for submission of such return may be extended by DCT upon application for
maximum 15 days. For failure of filing such return, penalty as per section 124 will be
imposed. The DCT, with the approval of the Commissioner, shall select the number of
returns of withholding tax within four years from the end of the year in which the return is
filed.
DCT after examining the withholding tax return may impose penalty under sections 57, 57A
and 124 for any non-compliance regarding deduction of withholding tax appropriately.
4.19 Annual Information Return
Government may require any person or group of persons responsible for registering or
maintaining books of accounts or other documents containing a record of any specified
financial transaction to furnish an Annual Information Return in a prescribed form.
4.20 Concurrent jurisdiction
Board may direct any other authority to exercise concurrently the power and functions of
DCT in respect of all or any proceeding relating to receiving of return of income and issuance
of acknowledgement.
4.21 Assessment
Assessment of companies may be completed under provisional assessment, assessment

on correct return or universal self-assessment. The most common mode of assessment is
universal self-assessment scheme.
Any tax assessment should not be opened after the below mentioned years:
▪ 2 years from the end of the assessment year where the income was first assessment
been done through audit as per section 82BB;
▪ 3 years from the end of the relevant assessment year where first assessment been done
in case of transfer pricing as per section 107C; and
▪ 6 months from the end of the assessment year in cases other than above.
4.22 Universal self-assessment scheme
Refer to section 3.7 above.
4.23 Appeals
An assessee who feels aggrieved may file an appeal against the order to the Commissioner
of Taxes (Appeal) and against the order of the Commissioner of Taxes (Appeal) to the Taxes
Appellate Tribunal. An assessee can file appeal against the order of the Taxes Appellate
Tribunal only on the point of law to the Supreme Court – High Court Division. An appeal can
further be filed to the Appellate Division, if High Court Division allows for such appeal.
The first appeal before the Commissioner of Taxes (Appeal) shall have to filed within 45
days from the date of receiving of assessment order. The time limit for second appeal is 60
days from the date of receiving of first appeal order. The first and second appeal shall be
disposed of by the appellate authority within 150 days and 180 days respectively from the
end of the month at which the appeal was filed.
Where the return of income was not filed, no appeal shall lie against any order of
assessment under the section 153(4), unless the assessee has paid 10% of the tax as
determined by the DCT.
An assessee can file appeal against the order of the Taxes Appellate Tribunal only in the
area of law to the High Court Division of Supreme Court within 90 days from the date of
receiving tribunal order. If the assessee is aggrieved with the decision of High Court Division,
he may appeal to the Appellate Division of Supreme Court. There is no time limit for disposal
of appeal to Supreme Court.
No appeal shall be filed to the Appellate Tribunal unless the assessee has paid 10% of the
amount representing the difference between the tax as determined on the basis of the order
of the Appellate Joint Commissioner or Commissioner of Taxes (Appeals) and the tax
payable under section 74.
However, Appellate Joint Commissioner/Commissioner of Taxes (Appeals) may allow the

appeal for hearing if assessee pay the tax on the basis of return before filing of appeal to
Joint Commissioner or Commissioner of Taxes (Appeals).
Provided that the Commissioner of Taxes (Appeals) may reduce the requirement of such
payment upon application by the assessee if the grounds of such application appear
reasonable to him and shall pass such order in this regard as he thinks fit within thirty days
from date of the receipt of such application.
No reference shall lie to the High Court Division against an order of the Taxes Appellate
Tribunal unless the assessee has paid the following tax at the rate of –
a) 15% of the difference between the tax determined by the Appellate Tribunal and the tax
payable as per section 74 where tax demanded does not exceed Taka 1 million.
b) 25% of the difference between the tax determined by the Appellate Tribunal and the tax
payable as per section 74 where tax demanded exceeds Taka 1 million.
4.24 Submission of certain returns
Companies are required to submit the following returns to the DCT before the first day of
September each year:
- Information regarding the payment of salary

- Information regarding the payment of interest
- Information regarding the payment of dividend
With the publication in official gazette of SRO 161 of 2014, transfer pricing chapter has
become effective from 1 July 2014 (Please refer to Section 8) which also require following
particulars of international transactions to be furnished along with income tax return:
- Tangible property of revenue and capital nature transaction

- Rent, royalties and intangible property related transaction
- Services related transaction
- Financial transaction on interest, sale of financial assets, lease payment etc.
- Interest bearing/free loans, advances and investments
4.25 Power of search and seizure
Under section 117 of the Income Tax Ordinance 1984, an officer may extract data, or any
inputs stored in the electronic system or enter system by breaking through password
protection or analyse data, books of accounts, etc.
4.26 Freezing of property
Director General, Central Intelligence Cell or the Commissioner or the DCT, by order in
writing, may require a person not to remove assets upon receiving definite information on
concealment of person’s income/investment.
5. Tax incentives
5.1 Special Economic Zones and Developing Unit
In the year 2015, Government has introduced tax exemption for investment in setting up
industries in Special Economic Zones (SEZ) and Developing Unit in SEZ. These are
illustrated in below sections:
a) Tax benefits for investment in Special Economic Zones (SEZ):

The business income except income from edible oil, sugar, flour, cement, iron and iron
made product are exempted from Income tax for next 10 years from the date of
commercial operation in the following manner:
Year Exemption (% of income)

1st, 2nd and 3rd year 100%
4th year 80%
5th year 70%
6th year 60%
7th year 50%
8th year 40%
9th year 30%
10th year 20%
Furthermore, “capital gains” arising from transfer of share capital, royalty, technical
know-how and technical assistance fee paid by such company and declared dividend
are exempted from income tax for next 10 years from the date of commercial operation.
Above exemptions are subject to the following condition being met by the Project
Company:
(i) Existing industrial unit of any company situated outside the economic zone shall
not be relocated in the zone;
(ii) No used plant and machinery can be set up in investment unit which has already
been used in production of goods or services in Bangladesh;
(iii) Separate trading account and bank account shall be maintained for investment
units of same company situated inside and outside of economic zone;
(iv) All the inter-unit transaction between investment units situated inside and outside
of economic zone shall be reported in income tax return; and
(v) Accounts shall be maintained as per section 35 and income tax return shall be
submitted as per section 75, 75A, 108 and 108A of ITO 1984.
b) Tax benefits for Developing unit in SEZ:

The business income of economic zone developer is exempted from income tax for 12
years from the date of commercial operation in the following manner:

1st to 10th year 100%
11th year 70%
12th year 30%
The foreign technicians appointed in investing unit will get 50% tax exemption for next
3 years from the date of appointment subject to such company does not cross 5 years
from the date of commercial operation i.e. the company who has crossed 5 years from
the date of commercial production, their foreign technicians can not avail this benefit.
Both the above exemptions are subject to the following condition being met by the
Project Company/foreign technicians:
a. Obtain 12 Digit Taxpayer’s Identification Number; and

b. Submit income tax return as per section 75.
5.2 Hi-Tech Park Zone
The government has introduced “Bangladesh Hi-Tech Park Authority Act, 2010” (BHTPA)
for the development of the country. It is not limited for exporters only. The legislation has
specified the meaning of high-tech industry. As per section 2(12) of Bangladesh Hi-Tech
Park Authority Act, 2010-
“Hi-tech Industry means knowledge and capital based eco-friendly and information
technology (IT), software technology, bio-technology renewable energy, green
technology, hardware, information Technology Enabled Services (ITES) and Research
and Development (R&D) related industry.”
a) Tax benefits for Investing unit of Hi-Tech Park Zone
The business income is exempted from Income tax for next 10 years from the date of
commercial operation in the following manner:

Remaining 3 years 70%
Moreover, capital gains arising from transfer of share capital and declared dividend paid
by such company are 100% exempted and royalty, technical Know-how and technical
assistance fee paid by such company are 50% exempted from income tax for next 10
years from the date of commercial operation.
The foreign technicians appointed in investing unit will get 50% tax exemption for next
3 years from the date of appointment subject to such company does not cross 5 years
from the date of commercial operation i.e. the company who has crossed 5 years from
the date of commercial production, their foreign technicians can not avail this benefit.
Both the above exemptions are subject to the following condition being met by the
Project Company / foreign technicians:
(i) Obtain Twelve-Digit Taxpayer’s Identification Number; and

(ii) Submit income tax return as per section 75.
b) Tax benefits for Developing unit in Hi-Tech Park Zone:

The business income of Hi-Tech park developer is exempted from Income tax for next
12 years from the date of commercial operation in the following manner:

11th year 70%
12th year 30%
Moreover, declared dividend is exempted from income tax for next 10 years from the
date of commercial operation.
Please note that, the above exemptions are subject to the following condition being met
by the project company:
(i) Obtain Twelve-Digit Taxpayer’s Identification Number; and

(ii) Maintain accounts as per section 35 (Method of Accounting) and submit income
tax return as per section 75.
However, no question shall be raised to the source of any sum invested within the period
between 1 July 2019 and 30 June 2024 (both days inclusive) by a company in any
economic zone or any hi-tech park, if 10% of invested amount is paid as tax before filing
of the tax return.
5.3 Partial tax exemption for newly established industrial undertaking (Section 46BB)
Qualifying industrial undertaking set up between 1 July 2019 and 30 June 2024 and going
into commercial production/operation within those dates will be entitled to apply for granting
tax exemption. The exemption structure is as follows:
Industrial undertaking
Year Exemption
Area
(% of income)
Dhaka, Mymensingh and Chattogram Divisions 1st year 90%
excluding Dhaka, Narayanganj, Gazipur, 2nd year 80%
Chattogram, Rangamati, Bandarban and 3rd year 60%
Khagrachari Districts 4th year 40%
5th year 20%
Rajshahi, Khulna, Sylhet, Barisal and Rangpur 1 and 2nd year
st 90%
divisions (excluding City Corporation area) and 3rd year 80%
Rangamati, Bandarban and Khagrachari Districts 4th year 70%
5th year 60%
6th year 50%
7th year 40%
8th year 30%
9th year 20%
10th year 10%
“Bio-fertilizer” and “computer hardware” production industry shall be entitled to partial tax
exemption for 10 years even if it is set up in the districts of Dhaka, Gazipur, Narayanganj or
Chattogram.
Industrial undertaking does not include expansion of an existing undertaking for the purpose
of this section. In other words, expansion units will not qualify for tax exemption. The
following undertakings and facilities only will qualify for tax exemption:
a) "Industrial Undertaking" means:
i) An industry engaged in or in the production of, active pharmaceuticals ingredient

and radio pharmaceuticals; agriculture machineries; automatic bricks; automobile;
barrier contraceptive and rubber latex; basic components of electronics (e.g.
resistor, capacitor, transistor, integrated circuit, multilayer PCB etc.); bi-cycle
including parts thereof; bio-fertilizer; biotechnology based agro products; boiler
including parts and equipment thereof; compressor including parts thereof;
computer hardware; furniture; home appliances (blender, rice cooker, microwave
oven, electric oven, washing machine, induction cooker, water filter etc.);
insecticides or pesticides; leather and leather goods; LED TV; locally produced
fruits and vegetables processing; mobile phone; petrochemicals; pharmaceuticals;
plastic recycling; textile machinery; tissue grafting; toy manufacturing; tyre
manufacturing, electrical transformer, artificial fibre or man-made fibre
manufacturing, automobile parts and components manufacturing; automation and
Robotics design, manufacturing including parts and components thereof; artificial
Intelligence based system design and/or manufacturing; nanotechnology based
products manufacturing; aircraft heavy maintenance services including parts
manufacturing.
ii) Any other category of industrial undertaking as the Government may, by

notification in the official Gazette, specify.
b) Only those profits and gains of the mentioned industry shall qualify for tax exemption
which is within the purview of section 28.
c) The newly established undertaking is required to ensure that their paid up capital is not
less than Taka 2 million and 30% of the income exempted is invested in the said
undertaking or in any new industrial undertakings during the period of exemption or
within one year from the end of the period to which the exemption under that sub-section
relates. In addition another 10% of the income exempted is invested in each year before
the expiry of three months from the end of the income year in the purchase of shares of
a company listed with any stock exchanges in Bangladesh, failing which the income so
exempted shall, notwithstanding the provisions of Income Tax Ordinance 1984, be
subject to tax in the assessment year in which the undertaking failed to comply with the
provision and an individual not being a Bangladeshi citizen is employed or allowed to
work without prior approval of BIDA or any competent Government authority.
Provided that the quantum of investment referred to in this clause shall be reduced by
the amount of dividend, if any, declared by the company enjoying tax exemption under
this section.
d) The undertaking has to apply in prescribed form for approval within six months from the
end of the month of commencement of commercial production and be approved by the
Board for this purpose.
e) The undertaking needs to obtain a clearance certificate from the Directorate of

Environment and the undertaking has to maintain books of account on a regular basis
and submits income tax return under section 75 of the ordinance.
5.4 Partial tax exemption for newly established physical infrastructure facility (Section
46CC)
Qualifying physical Infrastructure set up between 1 July 2019 and 30 June 2024 and going
into commercial production/operation within those dates will be entitled to apply for granting
tax exemption. Tax exemption of different proportions will now be granted for 10 years if the
said physical undertakings are set up in any area of Bangladesh.

1st and 2nd year 90%
3rd year 80%
4th year 70%
5th year 60%
6th year 50%
7th year 40%
8th year 30%
9th year 20%
10th year 10%
▪ “Physical Infrastructure facility" means
an industry engaged in the production of deep sea port; elevated expressway; export
processing zone; flyover; gas pipe line; Hi-tech park; Information and Communication
Technology (ICT) village or software technology zone; Information Technology (IT)
park; large water treatment plant and supply through pipe line; Liquefied Natural Gas
(LNG) terminal and transmission line; mobile phone tower or tower sharing
infrastructure; mono-rail; rapid transit; renewable energy (e.g. solar energy plant,
windmill); sea or river port; toll road or bridge; underground rail; waste treatment plant;
or any other category of physical infrastructure facility as the Government may, by
notification in the official Gazette, specify.
▪ Only those profits and gains of the said industry shall qualify for tax exemption which is
within the purview of Income from business or profession under section 28 of the Income
Tax Ordinance, 1984.
▪ The newly established undertaking is required to ensure that their subscribed and paid
up capital is not less than Taka 2 million and 30% of the income exempted is invested
in the said undertaking or in any new industrial undertakings during the period of
exemption or within one year from the end of the period to which the exemption under
that sub-section relates to. In addition another 10% of the income exempted ) is required
to be invested in each year before the expiry of three months from the end of the income
year in the purchase of shares of a company listed with any stock exchanges in
Bangladesh, failing which the income so exempted shall, notwithstanding the provisions
of this Income Tax Ordinance 1984, be subject to tax in the assessment year in which
the undertaking failed to comply with the provision or an individual not being a
Bangladeshi citizen is employed or allowed to work without prior approval of BIDA or
any competent Government authority.
Readymade garments are allowed to invest 40% in the said undertaking or in any new
industrial undertakings.
▪ Provided that the quantum of investment referred to in this clause shall be reduced by
the amount of dividend, if any, declared by the company enjoying tax exemption under
this section.
▪ The undertaking has to apply in prescribed form for approval within six months from the
end of the month of commencement of commercial production and be approved by the
Board for this purpose.
▪ The undertaking needs to obtain a clearance certificate from the Directorate of

Environment and the undertaking has to maintain books of account on a regular basis
and submits income tax return under section 75 of the ordinance.
5.5 Tax exemption for Public Private Partnership (PPP) Project
In the year 2017, Government has introduced tax exemption as mentioned below (a, b and
c) for Public Private Partnership (PPP) work by Project Companies involved in the following
PPP projects:
1. National Highways or Expressways and related Service Roads

2. Flyovers
3. Elevated and At-Grade Expressways
4. River Bridges
5. Tunnels
6. River port
7. Sea port
8. Air port
9. Subway
10. Monorail
11. Railway
12. Bus terminals
13. Bus depots
14. Elderly care home
a) Income tax exemption of the business income of PPP Project Company:
The business income is 100% exempted from Income tax for next 10 years from the
date of commercial operation.
b) Income tax exemption of capital gains arising from the transfer of share capital
of PPP Project Company, Royalty, Technical Know-how and Technical assistance
fee paid by such company:
The capital gains arising from transfer of share capital, Royalty, Technical Know-how
and Technical assistance fee paid by such company are 100% exempted from Income
tax for next 10 years from the date of commercial operation.
c) Income tax exemption for foreign technicians employed in PPP Project Company:
The foreign technicians appointed in PPE Project Company will get 50% tax exemption
for next 3 years from the date of appointment subject to such company does not cross
5 years from the date of commercial operation i.e. the company who has crossed 5
years from the date of commercial production, their foreign technicians can not avail
this benefit.
Please note that, the above exemptions are subject to the following condition being met
by the project company:
1. Obtain 12 Digit Taxpayer’s Identification Number; and

2. Maintain accounts as per section 35 (Method of Accounting) and submit income tax
return as per section 75.
5.6 Income from exports (Sixth Schedule, Part-A, Para-28)
50% of income derived by any taxpayer from export shall be exempt from tax, except for a
company not incorporated in Bangladesh and company paying tax at a reduced rate.
5.7 Export Processing Zones
At present the following exemptions are available on tax payable:
- For a period of 5 years if the industry is set up in Export Processing Zones (EPZ) Dhaka
and Chattogram divisions excluding Rangamati, Bandarban and Khagrachari districts;
and
- For a period of 7 years if the said EPZ are set up in Rajshahi, Khulna, Sylhet and Barisal
divisions and Rangamati, Bandarban and Khagrachari districts.
Exemption
Area Year
(% of income)
Dhaka, Mymensingh and Chattogram 1st and 2nd year 100%
divisions excluding Rangamati, Bandarban 3rd and 4th year 50%
and Khagrachari districts 5th year 25%
Exemption
Area Year
(% of income)
Rajshahi, Khulna, Sylhet and Barisal divisions 1st, 2nd and 3rd year 100%
and Rangamati, Bandarban and Khagrachari 4th, 5th and 6th year 50%
districts 7th year 25%
To attain above exemption of EPZ industries, proper books of accounts have to be

maintained and must submit income tax return as per section 75 of Income Tax Ordinance
1984.
5.8 Income from the business of software development or Nationwide

Telecommunication Transmission Network (NTTN) and information technology
enabled services (ITES) (Sixth Schedule, Part-A, Para-33)
Income derived from the business of software development or Nationwide

Telecommunication Transmission Network (NTTN) and information technology enabled
services (ITES) is to be tax exempt up to 30 June 2024. However, those enjoying the
exemption must file tax return annually disclosing the income along with income from other
sources, if any.
Information Technology Enabled Services (ITES) definition has been widened as below:
▪ Software development;
▪ Software or application customisation;
▪ Nationwide Telecommunication Transmission Network (NTTN);
▪ Digital animation development;
▪ Website development;
▪ Web site services;
▪ Web listing;
▪ IT process outsourcing;
▪ Website hosting;
▪ Digital graphics design;
▪ Digital data entry and processing;
▪ Digital data analytics;
▪ Geographic Information Services (GIS);
▪ IT support and software maintenance service;
▪ Software test lab services;
▪ Call centre service;
▪ Overseas medical transcription;
▪ Search engine optimisation services;
▪ Document conversion, imaging and digital archiving;
▪ Robotics process outsourcing; and
▪ Cyber security services;
▪ Cloud service;
▪ System Integration;
▪ e-learning platform;
▪ e-book publications;
▪ Mobile application development service; and
▪ IT Freelancing.
5.9 Exemption of capital gains tax from sale of shares of listed companies for non-
resident (Sixth Schedule, Part-A, Para-43)
Any profits and gains of a non-resident assessee arising from the transfer of stocks or
shares of a public company listed in any stock exchange of Bangladesh shall be exempt
from income tax in Bangladesh subject to the condition that such assessee is entitled to
similar exemption in the country in which he is a resident.
5.10 Exemption of income from Cinema Hall or Cineplex (Sixth Schedule, Part-A, Para-44)
Any income derived from Cinema Hall or Cineplex has been given tax exemption facility
starting commercial exhibition from 1 July 2012 to 30 June 2024 as stated below:
Exemption
Area Year
(% of income)
Dhaka, Mymensingh and Chattogram divisions 1st and 2nd year 100%
excluding Rangamati, Bandarban and 3rd and 4th year 50%
Khagrachari districts 5th year 25%
Exemption
Area Year
(% of income)
Rajshahi, Khulna, Sylhet, Rangpur and Barisal 1st, 2nd and 3rd year 100%
divisions and Rangamati, Bandarban and 4th, 5th and 6th year 50%
Khagrachari districts 7th to 10th year 25%
5.11 Exemption of income from production of rice bran oil (Sixth Schedule, Part-A, Para-
45)
Any income derived by an industrial undertaking commencing commercial production from

1 July 2012 to 30 June 2024 has been given tax exemption as stated below:
Exemption
Area Year
(% of income)
Dhaka and Chattogram divisions (excluding 1st and 2nd year 100%
City Corporation area and Rangamati, 3rd and 4th year 50%
Bandarban and Khagrachari districts) 5th year 25%
Exemption
Area Year
(% of income)
Rajshahi, Khulna, Sylhet, Rangpur and Barisal 1st, 2nd and 3rd year 100%
divisions (excluding City Corporation area) and 4th, 5th and 6th year 50%
Rangamati, Bandarban and Khagrachari 7th to 10th year 25%
districts
5.12 Exemption of income from production of automobile
Any income derived from production of automobile (3-wheeler and 4-wheeler) in

Bangladesh is exempted from income tax for 10 years and additionally for the next 10 years,
the company will enjoy reduced tax rate of 10% subject to fulfilment of below listed
conditions:
1. The company shall be registered under the Companies Act 1994;

2. The company shall be registered with Bangladesh Investment Development Authority
(BIDA) and need to invest at least Taka 1,000 million;
3. The company must take maker’s code and type approval from Bangladesh Road
Transport Authority (BRTA);
4. To enjoy 100% exemption for initial 10 years, the manufacturing company needs to add
minimum 30% value addition in the production process. After 10 years exemption
period, the minimum value addition shall be 40% to enjoy the reduce tax rate of 10%
for the next 10 years. If the company fails to maintain the 40% value addition, then
general tax rate shall be applicable;
5. Within 5 years of getting approval the automobile engine, transmission system, steering
system shall be capable of being assembled in its own factory;
6. The automobile company should produce the parts using basic raw materials through
its own machinery. Example of related parts are – reinforcement pipe, reinforcement
bracket, fuel tank cover, battery seal, engine hook, waring clamp, condense fixing
bracket etc.;
7. The manufacturing company shall have paint shop authorised by the brand
manufacturer. If the brand manufacturer is registered in Bangladesh, then it shall have
its own paint shop and the final painting shall be done from its own paint shop;
8. In order to assemble an engine from completely knocked down stage to a complete
one, there shall be separate assembling line for three-wheeler manufacturing company;
and to produce the chassis and body parts, the company shall procure the small parts
either locally or through importation of the same.
9. To produce environment friendly car, the company shall follow Euro 3 Emission
Standard or any other standard equivalent to it and also certification is required from
brand manufacturer;
10. The manufacturing company shall comply with the regulations mentioned in ITO 1984.
The benefits mentioned above are not applicable for any kind of income generated
under any other heads other than income from production of automobile; and
11. Subject to fulfilment of the above conditions and approval granted by NBR, the
company, which shall start commercial production by 30 June 2030, will get the
benefits.
5.13 Exemption of income from production of specified ICT products
Any income generated by a company producing motherboard, cashing, UPS, speaker,

sound system, power supply, USB cable, CCTV and pen-drive is exempted from income
tax for 10 years subject to fulfilment of certain condition:

2. The manufacturing company shall add minimum 30% value addition in its factory;
3. The company shall comply with the regulations mentioned in ITO 1984;
4. The benefits mentioned above are not applicable for any kind of income generated
under any other heads other than income from production of ICT products; and
company, which shall start commercial production by 30 June 2030, will get the
benefits.
5.14 Exemption of income from production of specified agriculture-based products
Any income generated by a company engaged in processing of fruits, vegetables,

production of dairy and dairy products, child foods and agricultural machineries is exempted
from income tax for 10 years subject to fulfilment of certain condition:

2. The company shall be registered with BIDA and need to invest at least Taka 10 million;
3. All the raw materials used in processing of fruits, vegetables, production of dairy and
dairy products, child foods shall be produced locally;
4. Agricultural equipment means any kind of equipment used in the crops production or
any kind firming and operated through fuel or electricity;
5. The company engaged in production of agricultural machineries shall make minimum
30% value addition in its factory;
6. If the factory is penalized for unhealthy factory environment or production of poor-
quality food by government, then the benefits enjoyed for that particular year will be
cancelled;
7. The company shall comply with the regulations of Income Tax Ordinance 1984;
under any other heads other than income from production of specified agriculture-
based products;
9. The production business cannot be a part or separated entity from any existing
business or it cannot be restructured or reassembled to create a new entity for
producing products; and
company, which shall start commercial production within 1 July 2021 to 30 June 2030,
will get the benefits.
5.15 Exemption of income from production of light engineering machine
Any income generated by a company engaged in production of light engineering items shall
be exempted from income tax for 10 years, subject to fulfilment of following conditions:

under any other heads other than income from production of light engineering machine;
and
5.16 Exemption of income from production of home appliances
Any income generated by a company engaged in production of home appliances including

washing machine, blender, microwave oven, electric oven, rice cooker, electric sewing
machine, induction cooker, kittenhood and kitchen knives shall be exempted from income
tax for 10 years, subject to fulfilment of following conditions:
1. The company shall be registered under the Companies Act 1994 and BIDA;
2. The company engaged in production of agricultural machineries shall make minimum
30% value addition in its factory;
under any other heads other than income from production of home appliances; and
5.17 Exemption of income for providing training on human resource development
Any company engaged in providing career orientated education and training on automobile,
aircraft storage, food, footwear, glass, mining, mechanical, ship building, leather,
refrigeration, ceramics, mechanist, garment design and pattern making, pharmacist,
nursing, integrated medical, radiology and imaging, ultrasound, dental, animal health,
clothing and garment finishing, poultry farming in agriculture, fisheries, science and IT
sector, then the business income of that company is exempted from tax for 10 years, subject
to fulfilment of following conditions:
1. The education and training institute shall be registered under the Companies Act 1994;
2. The company shall be registered with BIDA and need to invest at least Taka 50 million;
3. The training institute shall need to take authorisation from Bangladesh Technical
Education Board, Directorate General of Health Services or Bangladesh Nursing and
Midwifery Council and follow the curriculum prescribed as per National Skill
Development Rules;
4. As per government rules, the institute shall have permanent teacher, structure and
running laboratory or workshop;
under any other heads other than income from providing training on human resource
development; and
7. Subject to fulfilment of the above conditions and approval granted by NBR, the institute
gets exemption for 10 years from the date of approval.
5.18 Exemption of income of certain type of hospital
Any income generated by hospital from proving health care services shall be exempted
from income tax for 10 years upon fulfilling certain conditions:
1. The hospital shall be registered under the Companies Act 1994 and BIDA;
2. The institute shall take approval as hospital from Directorate General of Health Services
of Health Ministry and other respective authorities;
3. The hospital shall be situated outside Dhaka, Narayangonj, Gazipur and Chattogram
district;
under any other heads other than income from providing health care service; and
Hospital which are eligible for the exemptions are:
Type A:
- the hospital shall be minimum 250 bed hospital with paediatric and neonatal, women’s
and maternal health, oncology, and well-being preventive medicine unit.
- Directed by closed staffs including doctors.
- Minimum 5% ICU shall be there.
Type B:
- The hospital shall be minimum 200 bed specialised hospital
- Directed by closed staffs including doctors
5.19 Income from production of corn, maize or sugar beet
Income from production of corn, maize or sugar beet is tax exempted up to 50%.
5.20 Exemption from income of export of handicrafts
Income derived from the export of handicrafts shall tax exempt up to 30 June 2024.
5.21 Income derived from any SME
Income derived from any Small and Medium Enterprise (SME) engaged in production of any
goods is exempted if
- annual turnover is not more than Taka 5 million
- annual turnover is not more than Taka 7 million where SME is owned by women.
5.22 Donation to any fund established by “Trust of Prime Minister Education Assistance
Act 2012”
Exemption limit:
- Companies – lower of 25% of income or Taka 80 million

- Other than companies – lower of 20% of income or Taka 10 million
5.23 Incentives for private sector power generation companies (other than coal based)
commencing commercial operations from 1 January 2020 to 31 December 2022
Non-coal based private power generation companies starting commercial operations from
1 January 2020 to 31 December 2022 and complying with the requirements of private sector
power generation policy of Bangladesh will get the following tax incentive:
- Private power companies’ power generation income is exempt from corporate tax up to
31 December 2034 from the date of commencement of commercial operations.
- Salaries of expatriate employees of such power generating companies shall also be tax
exempt for a period of three years, starting with the date of the expatriate’s arrival in
Bangladesh.
- Interest payments to foreign lenders will be tax exempt. Royalties and technical
assistance fees paid by such companies will also be tax exempt.
Capital gains from the sale or transfer of shares by the investing company shall be exempt
from tax.
However, all such companies shall maintain accounts and submit return in due date of filing
under section 75.
5.24 Incentives for private sector power generation companies (other than coal based)
commencing commercial operations from 1 January 2023
Non-coal based private power generation companies starting commercial operations on or

after 1 January 2023 and complying with the requirements of private sector power
generation policy of Bangladesh will get the following tax incentive:
Rate of tax
Tax exempted period
exemption
First 5 years from the commencement of commercial production 100%
Up to next 3 years 50%
Up to next 2 years 25%
Above applies to income from power generation only.
All such companies shall maintain accounts and submit return in due date of filing under
section 75.
5.25 Incentives for private sector power generation companies (coal based)
Coal based private power generation companies entering into agreement within 30 June
2020 and starting commercial production within 30 June 2023 and complying with the
requirements of private sector power generation policy of Bangladesh will get the following
tax incentive:
▪ Private power companies’ power generation income is exempt from corporate tax for a
period of 15 years from the date of commencement of commercial operations.
▪ Salaries of expatriate employees of such power generating companies shall also be tax
exempt for a period of three years, starting with the date of the expatriate’s arrival in
Bangladesh.
▪ Interest payments to foreign lenders will be tax exempt. Royalties and technical
assistance fees paid by such companies will also be tax exempt.
▪ Capital gains from the sale or transfer of shares by the investing company shall be
exempt from tax.
▪ All such companies shall maintain accounts and submit return in due date of filing under
section 75.
5.26 Exemption/reduced tax rate is not allowed in case of failure to file the return within
stipulated time
An assessee shall not be exempt from income tax or subject to reduced tax rate if the
assessee fails to submit the income tax return of any income year within the stipulated time.
Tax shall be charged at the regular rate on the disallowance as per section 30 even if it is a
tax exempted or reduced tax rate availed assessee or any loss or profit computed.
5.27 Agricultural income
Agricultural income (whose agriculture is the only source of income) up to Taka 200,000 for
an individual is tax exempted.
5.28 Interest on pensioners’ savings certificate
Income received by an individual from interest from pensioners’ savings certificate up to

Taka 500,000 is tax exempted.
5.29 Foreign income by individuals
Income earned in abroad by an individual assessee being a Bangladeshi citizen and brought
any such income into Bangladesh as per existing laws applicable in respect of foreign
remittance shall be tax exempted.
5.30 Dividend income
Dividend income up to Taka 50,000 derived from a company listed in any stock exchange
is tax exempted.
5.31 Gratuity income
Gratuity income from Government or approved gratuity fund up to Taka 25 million is tax
exempted.
5.32 Workers Profit Participation Fund income
Any payment from WPPF received by a worker up to Taka 50,000 is tax exempted.
5.33 Certain bond income
Income received by an assessee from wage earners development bond, US Dollar premium
bond, US Dollar investment bond, Euro investment bond, Pound Sterling premium bond is
tax exempted.
5.34 Donation to girls’ school/college
Income of an assessee donated in an income year by a crossed cheque or bank transfer to

any girls’ school or girls’ college approved by the Ministry of Education of the Government
is exempt from tax.
5.35 Donation to technical and vocation institution

any Technical and Vocational Training Institute approved by the Ministry of Education of the
Government is exempt from tax.
5.36 Donation to research and development

any national level institution engaged in the Research and Development (R&D) of
agriculture, science, technology and industrial development is tax exempted.
5.37 Employing disabled person
5% tax rebate will be allowed if at least 10% of total employees constitute disabled person.
5.38 Employing of third gender
Any institution employing persons of third gender, the number of which is at least 10% of
their total number of employees or 100 employees of Third gender, will enjoy a tax
exemption which will be the lower of:
- of total tax liability
- 75% of total salary paid to the employees of Third gender
5.39 Income received other than bank interest/dividend by any educational institution
Income received other than bank interest/dividend by any educational institution is tax
exempted if it
• is enlisted for Monthly Pay Order (MPO) of the Government;
• follows the curriculum approved by the Government; and
• is governed by a body formed as per Government rules.
5.40 Income received other than bank interest/dividend by any public university, ICAB,
ICMAB and ICSB
Income received other than bank interest/dividend by any public university, ICAB, ICMAB
and ICSB is exempted.
5.41 Corporate Social Responsibility (CSR) activity to get tax rebate
National Board of Revenue has issued S.R.O. 186-law/Income tax/2014 amending

previously issued S.R.O. 229-Law/2011 dated 4 July 2011. Accordingly, a company will be
eligible to a tax rebate at 10% of allowable limit incurred in connection with corporate social
responsibility subject to the following terms and conditions:
a) any company will be allowed to get rebate on investment in CSR amounting to 20% of
income of the company or Taka 120 million, whichever is lower.
b) any company who intends to get rebate through CSR shall make regular payment of
salaries and wages to its employees, have waste treatment plant, make regular payment
of tax, VAT and institutional loan, donate to Organisations approved by the Government
and comply with all existing provisions of Labour Code.
c) any company shall not show amount expended in CSR as inadmissible expenditure in
its trading account or profit and loss account.
d) any company shall submit necessary information and documents to the DCT regarding
the amount expended in CSR as demanded allowable is actually expended or not.
e) the donation under CSR shall be done through proper banking channel.
The following are the areas of CSR for which company may avail tax rebate facilities:
a) donation made to natural disaster affected people through government organisation

b) donations made to institution engaged in establishment and maintenance of old home
c) donations made to social institution engaged in the welfare of mentally or physically
disabled people
d) donations made to organisations engaged in educating street children
e) donations made to organisations engaged in projects on accommodation for the slum
dwellers
f) donations made to social institutions engaged in campaign for women rights and against
dowry system
g) donations made to institution engaged in maintenance and rehabilitation of orphan/
rootless children
h) donations made to institutions engaged in research on liberation war, expansion of the

consciousness of independence war and the act of honourable living of the freedom
fighters
i) donations made to institutions engaged in sanitation and sewerage work at Chattogram
Hill Districts, char areas and areas surrounding breaking up of banks of river
j) donation made to institution engaged in medicating cleft leap, cataract, cancer and
leprosy
k) donation made to person or institution engaged in treatment of acid affected people
l) donation made to specialised hospital [like cancer hospital, lever hospital, kidney
hospital, thalassemia hospital, eye hospital and cardiology hospital] for free treatment to
poor patient
m) donation made to public universities
n) donation made to government approved educational institution for giving stipend to
insolvent meritorious freedom fighters’ children with a view to providing technical or
vocational education to them
o) any assistance made to schools and colleges under MPO for improving computer and
English education
p) donations to organisations engaged in providing technical and vocational training to
unskilled or semi-skilled labour for export of human resources
q) donations made to national sports institutions engaged in the development of
infrastructure and training at national level
r) any contribution to museum made for freedom fighter at national level
s) any contribution to organisation engaged in the preservation of the memories of the
Father of the Nation
t) any donation to any social welfare organisation, NGO or not for profit organisation
engaged with awareness, treatment or rehabilitation for HIV, AIDS and the drug addicted
u) any donation to any social welfare organisation, NGO or not for profit organisation
engaged with rehabilitation for children or women rescued from overseas trafficking
v) any donation to any government approved fund for national disaster or tournament or
national carnival.
6. Penalty and prosecution for non-compliance

▪ Penalties are applicable for non-filing of tax return (under section 75, 77, 89, 91
or 93) as shown below:
10% of last assessed tax or Taka 1,000; whichever is higher and a further penalty of
Taka 50 for every day during which the default continues. However, in case of individual,
penalty shall not exceed:
- Taka 5,000 for an assessee whose income was not assessed previously; or
- Taka 1,000 or 50% of tax liability on last assessed income; whichever is higher.
▪ Penalties are applicable for non-filing or non-furnishing of any return, certificate,

statement, accounts or information (under section 75A, 103A, 108 and 108A) as
shown below:
10% of last assessed tax or Taka 5,000; whichever is higher and a further penalty of
Taka 1,000 for every month during which the default continues.
▪ Penalties are applicable for non-filing or non-furnishing of certificate, statement

etc. (under section 58, 109, 110 and 184C) as shown below:
Taka 5,000; a further penalty of Taka 1,000 for every month during which the default
continues.
▪ Penalties are applicable for non-filing or non-furnishing of information (under

section 113) as shown below:
Taka 25,000; a further penalty of Taka 500 for every day during which the default
continues.
▪ Penalty for failure to verify Taxpayer's Identification Number
Failure to verify the authenticity of an e-TIN certificate may result in a penalty up to Taka
50,000 to the person responsible for verification of e-TIN.
▪ Penalty for failure to pay tax on the basis of return
A person, who fails to pay balance tax under section 74 may face a penalty at the rate
of 25% on the total tax payable or on the short amount of tax payment.
▪ Delay interest for not filling return on or before the Tax Day
An assessee is liable to pay a delay interest at the rate 2% per month but not exceeding
one year if the assessee fails to file the income tax return on or before the tax day
However, such delay interest will be applicable on the difference between the tax
assessed on total income for the assessment year and the tax paid in advance (including
tax deduction) for that assessment year.
▪ Failure to issue certificate of deduction of tax
Taka 500 and a further penalty of Taka 250 for every month during which default
continues in issuing certificate of deduction of tax in prescribed form to persons from
whom tax has been collected/deducted as required under section 58 of the Income Tax
Ordinance or in filing of particulars of salary payments as provided in section 108 or

information regarding payment of interest as provided in section 109 or information
regarding payment of dividend as provided in section 110 in Income Tax Ordinance
1984.
▪ Penalty for using fake Taxpayer's Identification Number
Where a person has, without reasonable cause, used Taxpayer's Identification Number
(TIN) of another person or used fake TIN on a return of income or any other documents
where TIN is required under this Ordinance, the DCT may impose a penalty not
exceeding Taka 20,000 on that person.
▪ Punishment for improper use of Taxpayer's Identification Number
A person is guilty of an offence punishable with imprisonment for a term which may
extend to three years or with fine up to Taka 50,000 or both, if he deliberately uses or
used a fake Taxpayer's Identification Number (TIN) or a Taxpayer's Identification
Number (TIN) of another person.
▪ Punishment for obstructing an income tax authority
A person, who obstructs an income tax authority in discharge of function, shall commit
an offence punishable with imprisonment of maximum one year, or with a fine, or with
both.
▪ Punishment for incorrect or false audit report by chartered accountant
A penalty of Taka 50,000 to Taka 200,000 shall be imposed on such chartered

accountant when DCT, CT (Appeals) or Appellate Tribunal is satisfied beyond
reasonable doubt that the audit report is not certified by a chartered accountant and is
false or incorrect.
▪ Punishment for furnishing fake audit report
Imprisonment between 3 months and 3 years or a fine up to Taka 100,000 or both shall
be imposed on a person furnishing fake audit report.
▪ Punishment for unauthorised employment
Imprisonment between 3 months and 3 years or a fine up to Taka 500,000 or both shall
be imposed on the person employing or allowing to work any foreign individual without
prior approval from appropriate authority of the Government.
▪ Penalty for concealment of income
A penalty of 15% of tax of which would have been avoided shall be imposed for
concealment of income by any means.
If an assessee conceals or understates any income, he shall be fined with 15% on the
tax that would have been avoided. If the concealment is detected after more than one-
year, additional penalty of 15% will be charged for each of the following year.
Furthermore, if the assessee deliberately conceals the income, he shall be punishable
with an imprisonment of 3 months to 5 years, or fine, or both.
7. Voluntary disclosure
An assessee who had not filed any income tax return or filed return showing lower income
than actual or was not assessed for any previous years, may disclose the income in the
return under any head. However, the following conditions need to be complied before filing
such return:
a) Tax has to be paid at applicable rates on his total income; and
b) Penalty has to be paid at the rate of 10% of tax proportionate to such income.
A declaration needs to be submitted along with the tax return stating the name of assessee,
heads of declared income and amount of tax and penalty.
The assessee will not be able to avail this opportunity if any proceedings have commenced
against him by the Tax Authority under sections 93, 113(f), 164, 165 or 166.
Also, income derived from any illegitimate source, or any criminal activity, or income
exempted from tax, or income chargeable to tax at reduced rate in accordance with section
44 will not be able to avail this opportunity.
The income shown as stated above may be invested in the following sectors:
- Industrial undertaking including its expansion

- Balancing, modernisation, renovation and extension of any existing industry
- Building or apartment or land
- Securities listed with a Stock Exchange in Bangladesh, or
- Any trade, commercial, or industrial venture engaged in production of goods or services.
8. Transfer pricing
Key points in brief are as follows:
(i) Transactions considered under transfer pricing regulation, are those transactions
between associated enterprises, either or both of whom are non-residents, in the
nature of purchase, sale or lease of tangible or intangible property, provisions of
services, lending or borrowing money, or any other transactions having a bearing on
the profits, income, losses, assets, financial position or economic value of such
enterprises, etc.
(ii) There are extensive provisions in the Act regarding responsibility and determination of
“arms-length price” of such transactions.
(iii) If such a transaction is not found to be at arms-length price, DCT with prior approval of
Board, may determine via the Transfer Pricing Officer the arms-length price of the
transaction.
(iv) In absence of any provision regarding arm’s length price determination, international
best practice of using interquartile range (25th -75th) was being commonly followed for
computing arm’s length price. A guideline for applying range concept in computing
Arm’s Length Price has been introduced through Finance Act 2019. The new Act
introduced a narrow range of 30th percentile to 70th percentile of the comparable data
set. If the price at which the international transaction has actually been undertaken is
within the range referred as above, then the price at which such international
transaction has actually been undertaken shall be deemed to be the arm’s length price.
If the price at which the international transaction has actually been undertaken is
outside the arm’s length range referred as mentioned above, the arm’s length price
shall be taken to be the median of the data set. In case the dataset has less than six
comparable, the arm’s length price shall be the arithmetical mean of all the values
included in the dataset. Any adjustment made in determining arms-length price shall
be treated as income taxable at the regular rate irrespective of income exempted from
tax or subject to reduced rate of tax.
(v) Every person who has entered into an international transaction shall furnish, along with
the return of income, a statement of international transactions in the form and manner
as may be prescribed.
(vi) Every person who has entered into an international transaction shall keep and maintain
such information, documents and record, and the tax authority shall prescribe the
period for which the information, documents and records shall be kept and maintained.
The tax authority may require any person by notice in writing, to furnish any
information, documents and records within the period as may be specified in the notice.
(vii) A report from Chartered Accountants/Cost Management Accountant shall be submitted
upon request via a notice issued by the tax authority, if the aggregate value of
international transactions exceeds Taka 30 million during an income year. The report
from Chartered Accountants/Cost Management Accountant provides reasonable
assurance as to whether all information, documents, and records provided by the
company are complete and authentic. Further, Failure to furnish such report may lead
to a penalty up to Taka 300,000.
(viii) Every person fails to submit transfer pricing return along with corporate income tax
return may result in a penalty of maximum 2% on the value of international
transactions.
9. Others
9.1 Stay of proceeding in case of pending appeal or reference at Appellate Tribunal or
High Court Division
In the process of Alternate Dispute Resolution (ADR), an appeal filed by the DCT at Tribunal
or reference application made by the Commissioner of Taxes (Appeal) at High Court level,
will be stayed until disposal of the ADR application.
An assessee shall not be eligible for application to ADR if he fails to pay tax payable as per
section 74 where the return of income for relevant year or years has been submitted.
9.2 Decision of ADR
In case of Alternate Dispute Resolution (ADR), time limit for the facilitator to make an
agreement is 3 months from the end of the month in which the application was made, unless
no agreement shall be deemed to have been reached.
9.3 Notice, assessment order and tax form delivered as per section 174
If any notice, assessment order and tax form has been delivered to authorised
representative as per section 174, it will be treated as delivered to the assessee.
9.4 Inclusion of amortisation in Third Schedule
Amortisation of licence fee including Spectrum Assignment fees, GSM license fees, license
acquisition fees or license renewal fees paid by cellular mobile phone operator or any other
company engaged in providing specialised service allowed if:
- the assessee is a resident company for tax purpose;
- licence fee is paid before or after 1 July 2012 wholly and exclusively for the purpose of
obtaining a permission from the government authority;
- licence/permission is granted for 2 or more years to run a business;
- amortisation charge/deduction will be calculated as proportionate to such years, and

such amortisation/deduction shall continue till the last year of the period for which the
licence was granted; and
- In case of other companies, such license should be integral part of the operation of the
business.
9.5 Computation of income of contractor, etc., of an oil company residing out of

Bangladesh (Rule 39)
Income of contractors to an oil company or as a sub-contractor to the contractor to an oil

company residing out of Bangladesh shall be deemed to be an amount equivalent to 15%
of the gross earnings from operations.
9.6 Tax calendar for company
Filing/Payment Month
Corporate tax return filing under section 75 15th day of seventh month or 15
September from end of account
period; whichever is later
Advance tax instalment under section 64 15th day of September, December,
March and June
Withholding tax return under section 75A 31 January and 31 July
Statement filing regarding salary under section 108 Before the 1st day of September
Statement filing regarding employee tax return On or before 30 April
108A
Statement of deduction of tax from salary under Within 20th day of following Month
rule 21
Statement of deduction of tax from other sources Within 20th day of following Month
under rule 18
10. Income subject to tax withholding/deduction/collection at source

National Board of Revenue (NBR) has issued an order about use of tax jurisdiction for
depositing withholding tax.
As per the new order, companies, non-governmental organisations and co-operatives (other
than bank and financial institutions) are advised to deposit all of the withholding tax to the
respective company’s tax zone where its tax file will be assessed. Earlier, withholding tax
would be deposited to different tax zone based on withholding tax section applied for tax
deduction. The companies which are assessed under the Large Tax-payer Unit (LTU) are
advised to continue its existing system in depositing the withholding tax. Also, there are
different requirements for Banks, Financial Institutions, any person other than companies
and Government and its entity.
A statement is required to be submitted to income tax authority for all deduction or collection
made on a monthly basis.
All companies including private companies, branch companies, liaison offices, banks and
other financial institutions etc. are required to collect/withhold tax at the time of payment as
shown hereunder:
▪ Salaries (Section 50)
Tax withholding should be made monthly on the basis of computation of estimated

annual total income. Refer to section 2 above for tax rates.
This rule is also applicable to the total income from salary of Government official, where
Government’s accounts office shall issue a tax deduction certificate.
However, there is a provision of lesser or no withholding of tax from salary on the basis
of a certificate issued by DCT and specifying the same upon application by the
assessee.
▪ Discount on the real value of Bangladesh Bank bills (Section 50A)
Taxes are to be deducted at the maximum rate or at the rate applicable to such amount,
whichever is greater. No tax shall be deducted from the discount received from these
bills purchased by a superannuation fund, a pension fund, a gratuity fund, a recognised
provident fund or a workers' profit participation fund.
▪ Remuneration of Member of Parliament (Section 50B)
Taxes are to be deducted at source from remuneration paid to Members of Parliament

at average rate, but other allowances paid like bonus, house rent will remain tax-free.
▪ Interest/discount on govt. securities and securities approved by the government

(Section 51)
Taxes are to be deducted at the rate of 5% while making payment or crediting,

whichever is earlier on interest or discount, receivable on maturity, from the purchaser
of the securities excluding Treasury bill and Treasury bond issued by the Government.
For security, which is based on Islamic principles, the tax of 5% shall be deducted at
the time of payment or credit.
▪ Payments for supply of goods, execution of contracts (Section 52, Rule 16)
Where any payment is to be made by a specified person to a resident on account of

execution of contract other than a contract for providing or rendering services, the
deduction of payment shall be at the following rates:
Base amount* Rates

Where the payment does not exceed Taka 5 million 3.0%
Where the payment exceeds Taka 5 million but does not exceed Taka 20 5.0%
million
Where the payment exceeds Taka 20 million 7.0%
The rate of deduction from the following classes of persons shall be at the rate specified
in the below: -
Sl. Amount Rates

No.
1. In case of oil supplied by oil marketing companies 0.6%
2. In case of oil supplied by dealer or agent (excluding petrol pump 1%
station) of oil marketing companies, on any amount
3. In case of supply of oil by any company engaged in oil refinery, on 3%

any amount
4. In case of company engaged in gas transmission, on any amount 3%
5. In case of company engaged in gas distribution, on any amount 3%
6. In case of an industrial undertaking engaged in producing cement, 2%
iron or iron products except MS Billets
7. In case of an industrial undertaking engaged in the production of MS 0.5%
Billets
8. In case of locally procured MS Scrap 0.5%
9. In case of supply of rice, wheat, potato, onion, garlic, peas, chickpeas, 2%
lentils, ginger, turmeric, dried chillies, pulses, maize, coarse flour,
flour, salt, edible oil. sugar, black pepper, cinnamon, cardamom,
clove, date, cassia leaf, jute, cotton. yam and all kinds of fruits
Provided that in absence of 12-digit TIN, the withholding rate will be 50% higher than
from the above-mentioned rates.
Deduction shall be fifty percent (50%) higher if the payee does not receive payment by
bank transfer or by mobile financial services or any other digital means approved by
Bangladesh Bank;
No tax shall be deducted or tax shall be deducted at proportionate reduce rate, upon
present of exemption certificate or reduce rate certificate issued by NBR.
Provided that where any imported goods on which tax has been paid at source under
section 53, tax at source on the said supply shall be B-A, where –
A= the amount of tax paid under section 53,

B= the amount of tax applicable under this section if no tax were paid under section 53
or 53E.”
Provided that in case of the goods supplied by any distributor or any other person under
a contract as referred in sub-section (3) of section 53E, the term “B” as mentioned in
paragraph (d) shall be computed as follows:
A = the amount of tax collected under section 53E

B = {the selling price of the company to the distributor or the other person as referred in
section 53E (3)} x 7% x 5%
Under this section firm, project, programme, joint venture, consortium, trust, cooperative
society and public-private partnership are also treated as deducting authority along with
any person.
*The base amount means the higher of the following:

- Contract value, or
- Bill or invoice amount, or
- Payment.
Payment includes a transfer, a credit or an adjustment of payment or an order or

instruction of making payment.
▪ Payments for royalty (Section 52A)
Tax is required to be deducted at the following rates from the payment to a resident on
account of royalties, franchise, or the fee for using licence, brand name, patent,
invention, formula, process, method, design, pattern, know-how, copyright, trademark,
trade name, literary or musical or artistic composition, survey, study, forecast, estimate,
customer list or any other intangibles:
Base amount* Tax rate if the payee Tax rate if the payee has
has TIN no TIN
Up to Taka 2.5 million 10% 15%
Over Taka 2.5 million 12% 18%
Under this section firm, project, programme, joint venture, trust, cooperative society and
public-private partnership are also treated as deducting authority along with any person.
from the above mentioned rates.
- Payment

No deduction needs to be made in cases where National Board of Revenue has issued
a certificate waiving such deduction or exemption.
▪ Deduction from payments of certain services (Section 52AA)
Where any payment is to be made by a specified person to a resident on account of

certain services as stated below:
Rate of deduction of tax (% of

base amount*)
Description of service Base amount up Base amount
to Taka 2.5 exceeds Taka
million 2.5 million
Advisory or consultancy 10% 12%
Professional service, technical services and 10% 12%
technical assistance fee
For below and any other service of similar
nature-
a) On commission or fee 10% 12%
b) On gross bill amount 1.5% 2%
- Catering service
- Cleaning service However, where However, where
- Collection and recovery service both gross bill both gross bill
- Private security service and commission and commission
- Supply of manpower are shown; are shown;
minimum minimum
- Creative media service
withholding tax withholding tax
- Public relations service will be based on will be based on
- Event management service 10% commission 10% commission
- Training, workshops, etc. organisation and on gross bill on gross bill
management service amount. amount.
- Courier service
- Packing and Shifting service
Media buying agency service
a) On commission or fee 10% 12%
b) On gross bill amount 0.5% 0.65%
However, where However, where

both gross bill both gross bill
and commission and commission
are shown; are shown;
minimum minimum
withholding tax withholding tax
will be based on will be based on
2.5% commission 2.5% commission
on gross bill on gross bill
amount. amount.
Indenting commission 6% 8%
Meeting fees, training fees or honorarium 10% 12%
Mobile network operator, technical support
service provider or service delivery agents 10% 12%
engaged in mobile banking operations
Credit rating agency 10% 12%
Motor garage or workshop 6% 8%
Private container port or dockyard service 6% 8%
Shipping agency commission 6% 8%
Stevedoring/berth operation
Rate of deduction of tax (% of

base amount*)
Description of service Base amount up Base amount
to Taka 2.5 exceeds Taka
million 2.5 million
- on commission or fee 10% 12%
- on gross bill 1.5% 2%
(i) Transport service, carrying service, vehicle 3% 4%
rental service
(ii) Any other service under any sharing

economy platform including ride sharing
service, coworking space providing service and
accommodation providing service
Wheeling charge for electricity transmission 2% 3%
Any other service unless provided by bank,
insurance or financial institution 10% 12%
from the above mentioned rates.
- Payment

No deduction needs to be made in cases where National Board of Revenue has issued
a certificate waiving such deduction or exemption.
▪ Collection of tax from clearing and forwarding agents (Section 52AAA)
This section provides for deduction on account of commission receivable by clearing

and forwarding agents licensed under Customs Act 1969 at 10%. The collection will be
made by the Commissioner of Customs at the time of clearance of goods imported or
exported.
▪ Cigarette manufacturers (Section 52B)
Sellers of banderols are liable to collection of tax at 10% of the value of banderols. The
seller will collect the tax from the manufacturer of cigarettes. The tax so collected shall
be treated as minimum tax under section 82C.
▪ Compensation against acquisition of property (Section 52C)
Payment on account of compensation against acquisition by the Government of any

immovable property is liable to deduction of tax at the rate of -
(a) 6% of the amount of compensation where the immovable property is situated in any
city corporation, municipality or cantonment board; and
(b) 3% of the amount of compensation where the immovable property is situated

outside any city corporation, municipality or cantonment board.
▪ Interest on savings instruments (Section 52D)
Tax is required to be deducted at the rate of 10% from interest of savings instrument
purchased by an approved superannuation fund or pension fund or gratuity fund or a
recognised provident fund or a workers’ profit participation fund. However, if the
accumulated investments do not exceed Taka 500,000, then tax at 5% will be withheld
on the interest income from that saving certificate. Earlier the interest income of such
funds was exempted from tax deduction.
No deduction shall be made where the cumulative investment at the end of the income
year in the pensioner’s savings certificate does not exceed Taka 500,000.
Tax is not required to be deducted on interest income from wage earners development
bond, US Dollar premium bond, US Dollar investment bond, Euro premium bond, Euro
investment bond, Pound Sterling premium bond, Pound Sterling investment bond.
▪ Payment to beneficiaries of Worker Profit Participation Fund (Section 52DD)
Tax is required to be deducted at the rate 5% for making any payment to a beneficiary
of WPPF. However, no tax shall be deducted if the beneficiary:
- does not have taxable income and

- The fund amount does not exceed Taka 25,000.
▪ Brick manufacturers (Section 52F)
Any person responsible for issuing any permission or renewal of permission for the
manufacture of bricks shall collect tax from the manufacturer at the following rates:
(a) Taka 45,000 for one section brick field;

(b) Taka 70,000 for one and half section brick field;
(c) Taka 90,000 for two section brick field; and
(d) Taka 150,000 for brick field producing bricks through automatic machine.
However, such permission is accompanied by a tax clearance certificate of the

preceding assessment year along with the receipt of the tax verified by the DCT.
▪ Commission on opening of letter of credit (Section 52I)
Tax is to be deducted at the rate of 5% by banks at the time of collection of L/C

commission.
Banks are required to deposit all taxes deducted by the 15th of the following month to
Bangladesh Bank under appropriate head of accounts. The amounts so deposited will
be treated as advance tax payment by the banks.
▪ Collection of tax from travel agent (Section 52JJ)
Tax is required to be deducted or collected by the person responsible for paying

commission, discount or any other benefits on behalf of airlines at the rate of 0.3% of
the total value of air ticket or charge for carrying cargo at the time of such payments.
Value of air ticket or charge for carrying cargo shall not be included embarkation fees,
travel tax, flight safety insurance, security tax and airport tax.
In addition to the above, tax is required to be deducted at the rate of 0.3% on payment
of incentive bonus, performance bonus or any other benefits from sale of ticket bill of
carrying cargo by air. Calculation will be as follows:
(A/B)*C where:
A = Incentive bonus/performance bonus or any other benefit
B = is the amount of commission or discount
C = 0.3% (source tax)
▪ Issue or renewal of trade licence (Section 52K)
City Corporation shall collect tax at Taka 3,000 in Dhaka South City Corporation, Dhaka
North City Corporation or Chattogram City Corporation, at Taka 2,000 in any City
corporation other than above, at Taka 1,000 in any municipality at any district
headquarter, at Taka 500 in any other municipality, while issuing or renewing trade
licence. The tax so collected shall be adjusted against tax payable by the recipient of
licence.
▪ Collection of tax from freight forwarding agency commission (Section 52M)
Tax is to be withheld at 15% from commission payable to freight forwarding agency. Tax
so withheld shall be adjusted against tax payable by the assessee.
▪ Collection of tax on account of rental power (Section 52N)
Tax is to be withheld at 6% by Bangladesh Power Development Board (BPDB) or any

other person from the payment to any power company on account of purchase of power.
Exemption or reduced tax deduction is applicable based on tax certificate from NBR.
▪ Collection of tax from rent of convention hall, conference centre (Section 52P)
Tax is to be withheld at 5% from rental payment to institutions like convention hall,

conference centre, hall room, hotel, community centre or restaurant.
Provided that no deduction shall be made when such amount is paid directly to the
Government.
▪ Collection of tax from resident for providing service abroad (Section 52Q)
Tax shall be deducted at the rate of 10% on any sum remitted or credited from abroad
by way of a fee, service charges, commission or remuneration, called by whatever
name, or by way of revenue sharing of any name and nature for;
- providing any service rendered in Bangladesh; or

- rendering any service or performing any task by a resident person in favour of
foreign person; or
- allowing the use of online platform for advertisement or any other purpose.
However, payment received for service rendered while staying outside the country is
excluded from this section.
Deduction of tax at source shall be 7.5% if the remittance has been received as
consideration for contracts on manufacturing, process or conversion, civil work,
construction, engineering or works of similar nature.
No deduction shall be made against the remittance received from abroad for proceeds
from sales of software or services provided by a resident is exempted from tax under
paragraph 33 of Part A of the 6th Schedule or the income is excluded from total income
by paragraph 48 of Part A of the 6th Schedule.
▪ Deduction of tax from receipts in respect of international phone call (Section 52R)
The bank, through which the receipt on account of International Gateway Service in
respect of international phone calls is received, shall deduct tax at the rate of 1.5% of
the total amount representing the said receipt at the time of crediting it to the account of
the international gateway service provider.
The international gateway service provider, through which the revenue related to
international phone call is shared under an agreement with the Bangladesh
Telecommunication Regulatory Commission (BTRC), shall deduct tax at the rate of
7.5% on the whole amount so paid or credited to any other persons under the said
agreement.
The provider of Interconnection Exchange (ICX) services or Access Network Services

(ANS), Bangladesh Telecommunication Regulatory Commission (BTRC) shall deduct
tax at the rate of seven point five percent (7.5%) on the whole amount so paid or credited
at the time of payment or credit where any amount is paid or credited in respect of
outgoing international calls.
Notwithstanding anything contained in above paragraph, where the Board gives a

certificate in writing on an application made by a person that income of the person
getting such payment is exempted from tax or will be liable to tax at a rate of tax less
than the rate specified in this section, the person responsible for giving any payment
shall, make the payment:
(a) Without deduction of tax; or

(b) Deduct tax at a rate lower as specified in the certificate.
▪ Deduction of tax from any payment in excess of premium paid on life insurance
policy (Section 52T)
Tax is to be deducted at 5% for paying any sum in excess of premium paid for any life
insurance policy maintained with any life insurance company. No deduction shall be
made in case of death of such policy holder.
▪ Deduction from payment on account of letter of credit (Section 52U)
The bank or financial institution, through which any local letter of credit or any financing
agreement, called by whatever name, is made between two or more persons within
Bangladesh for purchasing any goods for trading or processing will be captured under
this section. While the proceeds of such goods are paid, Bank shall deduct tax at 3% on
the total proceeds at the time of paying or crediting such proceeds to the account of the
person or persons providing such goods. In case of extending such credit facility to any
distributor, tax shall be deducted at 1%.
The tax at the rate of 2% shall be deducted with such arrangement in respect of
purchase or procurement of rice, wheat, potato, onion, garlic, peas, chickpeas, lentils,
ginger, turmeric, dried chillies, pulses, maize, coarse flour, salt, edible oil, sugar, black
paper, cinnamon, cardamom, clove, date, cassia leaf, computer or computer
accessories, jute, cotton, yarn and all kinds of fruits.
Nothing in this section shall limit the applicability of section 52.
▪ Deduction from payment by cellular mobile phone operator (Section 52V)
The Principal Officer of cellular mobile phone operator company responsible for making
any payment, on account of revenue or any license fees or any other fees or charges,
called by whatever name, to the regulatory authority, shall deduct tax at 10% of such
payment at the time of credit to payee or at the time of payment thereof, whichever is
earlier.
▪ Collection from importers (Section 53, Rule 17A)
The Commissioner of Customs or any other appropriate officer shall collect tax on
imported items up to 20% of the value of imported goods.
National Board of Revenue may grant exemption from tax collection or reduce tax rate
upon application where the assessee’s income is not taxable or reduce tax rate in any
year.
▪ Rent from house property (Section 53A, Rule 17B)
This is subject to a flat rate of 5% for all rent. "Rent" means any payment, by whatever
name called, under any lease, tenancy or any other agreement or arrangement for the
use of any house property or hotel accommodation including any furniture, fittings and
the land appurtenant thereto.
Hotel, hospital, clinic or diagnostic centre is also responsible for deduction.
▪ Shipping business of a resident (Section 53AA, 102)
This section provides for deduction of tax at 5% from total freight received or receivable
by a ship owned or chartered by a resident assessee. The rate will be 3% if service is
rendered between two or more foreign countries. The deduction will be made by the
Commissioner of Customs at the time of granting port clearance. The deduction so
made shall be treated as final tax liability under section 82C of the Income Tax
Ordinance. In addition to 5% tax on total freight, a certificate from the concerned DCT
shall be required for port clearance.
The amount paid or payable by way of demurrage charge or handling charge or any
other amount of similar nature will also be considered at the time of furnishing tax return
to DCT.
▪ Export of manpower (Section 53B)
Bureau of Manpower Employment & Training shall not grant for export of manpower by
recruiting agencies unless 10% of service charges or fees are paid as advance tax and
no new/renew license shall be issued unless a challan of advance tax of Taka 50,000
received from recruiting agencies.
▪ Export of certain items (Section 53BB)
Garments sector has been a priority segment for the Government. Every year, the
applicable withholding tax rate on such exports are reduced by separate regulatory
order (SRO). In last year, applicable rate was 0.25%. This year, taxes are to be withheld
by banks at 0.5% from the export proceeds received on account of export of jute goods
and from the exports of knitwear and woven garments, terry towel, carton and
accessories of garments industry, jute goods, frozen food, vegetables, leather goods
and packed food.
A company enjoying tax exemption either wholly or partially may apply to tax authority
and on the basis of his application the tax authority may exempt from deduction at
source or give order to withhold at a reduced rate.
▪ Member of Stock Exchanges (Section 53BBB)
Taxes are to be withheld at 0.05% on the value of shares, debentures, mutual funds, or
securities transacted by a member of a stock exchange and at the rate of ten percent
(10%) on the commission received or receivable by a member of a stock exchange for
the transaction of securities other than shares and mutual funds at the time of making
payment for such transactions. The deduction will be made by the Chief Executive
Officer of a stock exchange at the time of such payment.
▪ Export of any goods other than certain items (Section 53BBBB)
Every year, the applicable withholding tax rate on such exports are reduced by separate
special order. In last year, applicable rate was 0.25%. This year, any export proceeds
received from export of any products other than garments was subject to tax withholding
at 0.50%. The tax so withheld shall be treated as advance payment of tax liability.
A company enjoying tax exemption either wholly or partially may apply to tax authority
and on the basis of his application the tax authority may exempt from deduction at
source or give order to withhold at a reduced rate.
Public auction (Section 53C)

Taxes are to be collected from sale price at the rate of 1% in case of tea auction and in
all other case advance tax on the income from the sale price of such goods or property
from the auction purchaser at the rate of 10% of the sale price.
▪ Courier business of a non-resident (Section 53CCC)
Tax is required to be deducted/collected at the rate of 15% by the local agent of a non-
resident courier company on the amount of service charge accrued from the shipment
of goods, documents, parcels, or any other things outside Bangladesh.
▪ Actors or actresses (Section 53D, Rule 17E)
Taxes are to be withheld at 10% in case of any payment made for the purchase of any
Cinema, Drama or Radio and TV programme by any authority.
In case of any payment made to an actor/actress, tax is to be withheld at the rate of 10%
from such payment.
Provided that, no tax shall be deducted under this section if the total payment does not
exceed Taka 10,000.
▪ Deduction of tax at source from export cash subsidy (Section 53DDD)
Any person responsible for paying any amount on account of export cash subsidy to an
exporter for promotion of export shall, at the time of payment or credit of such amount,
shall deduct or collect tax in advance at the rate of 10% on the amount so payable.
▪ Commission, discount or fees payable to distributors for distribution or

marketing of manufactured goods (Section 53E)
Tax is to be withheld at 10% of the amount of payment or the amount allowed or the
value of benefits allowed by the way of commission, fees, discount, incentive or
performance bonus or any other performance related incentive or any other payment or
benefit of the similar nature for distribution or marketing of goods at the time of payment
or allowing the amount.
Any company making a payment in relation to the promotion of the company or its goods
to any person engaged in the distribution or marketing of the goods of the company
shall, at the time of payment, deduct tax at 1.5% of the payment.
Tax is to be collected by a company on sale of goods to any distributor or any other

person under a contract other than oil marketing company at following manner:
5% on the amount equal to B x C where,

B = Selling price of the company to a distributor or any other person
C = 5%
Provided that a cigarette manufacturing company shall collect tax at the rate of 3% at
the time sale of goods to its distributor or to such other person of the difference between
the sales price to distributor and the retail price fixed by such company.
▪ Commission, fees, charges, remuneration payable to foreign buyers’ agent

(Section 53EE)
If any payment is made to a foreign buyer’s agent as per terms of L/C as fees,
commission etc. then tax is to be withheld at 10% from such payment.
Tax so deducted shall be treated as final tax liability of the exporter with certain
exceptions under section 82C.
▪ Interest on savings, fixed deposits or term deposits and share of profit on term
deposits (Section 53F, Rule 17H)
Taxes are to be withheld by banks, non-banking financial institutions, leasing

companies, housing finance companies etc. at the time of credit or payments of interest
to a resident at the following rate:
(i) 10% where the person receiving such interest or share of profit furnishes his
twelve-digit Taxpayer's Identification Number (e-TIN) to the payer; or
(ii) 15% where the person receiving such interest or share of profit fails to furnish his
twelve-digit Taxpayer's Identification Number (e-TIN) to the payer.
Twelve-digit Taxpayer’s Identification Number (TIN) of parent shall be considered as

Taxpayer’s Identification Number (TIN) of a minor.
Rate of tax deduction at source shall be at 10% on interest on saving deposits where
balance does not exceed Taka 100,000 at any time in the year.
Tax at the rate of 10% shall also be applicable on the receipts of interest or share of
profit by public university, or an educational institution whose teachers are enlisted for
Monthly Pay Order (MPO), following the curriculum approved by the Government and
whose governing body is also formed as per Government rules or regulations, or any
professional institute established under any law and run by professional body of
Chartered Accountants, Cost and Management Accountants or Chartered Secretaries.
Tax at the rate of 5% is to be withheld from the interest arising out of any deposit
maintained by any fund irrespective of their tax exemption facility.
▪ Real estate or land development business (Section 53FF)
Taxes are to be collected at the following rates at the time of registering any document
for transfer of any land or building or apartment by the transferor who is engaged in real
estate or land development business:
In case of building or apartment situated:
Area For residential Not for residential

purpose purpose
Gulshan Model Town, Banani, Baridhara, Motijheel Taka 1,600 per Taka 6,500 per
Commercial Area, Dilkusha Commercial Area square metre square metre
Dhanmondi Residential Area, Defence Officers Taka 1,500 per Taka 5,000 per
Housing Society (DOHS), Mohakhali, Lalmatia square metre square metre
Housing Society, Uttara Model Town, Bashundhara
Residential Area, Dhaka Cantonment, Kawran
Bazar of Dhaka, Panchlaish Residential area,
Khulshi Residential area, Agrabad and Nasirabad
of Chattogram
Other areas of Dhaka South City Corporation, Taka 1,000 per Taka 3,500 per
Dhaka North City Corporation and Chattogram City square meter square meter
Corporation
Any other city corporation Taka 700 per Taka 2,500 per
square meter square meter
Other areas Taka 300 per Taka 1,200 per
square metre square metre
However, tax in respect of a residential apartment shall be 20% and 40% lower if the
size of the apartment including common space is not more than 70 and 60 square metre
respectively.
(i) 5% of deed value in case of property situated in Dhaka, Gazipur, Narayangonj,

Munshiganj, Narsingdi and Chattogram districts.
(ii) 3% of deed value in case of property situated in places in districts other than
above districts.
▪ Insurance commission (Section 53G)
Tax has to be withheld at 5% on commission paid to an agent.
▪ Surveyors of general insurance company (Section 53GG)
Taxes at 10% is to be deducted from remuneration or fees paid to a resident surveyor

engaged for conducting survey in connection with settlement of insurance claim.
▪ Collection of tax on transfer, etc. of property (Section 53H, Rule 17II)
The registering authority while registering a document shall collect income tax from the
transferor on the value of the land, building which the document of transfer relates to
and on which stamp duty is chargeable under Stamp Act 1899. The tax so collected
shall be treated as final tax liability as per section 82C.
The rate of tax will depend on the location of the land and building. The applicable rate
may vary from 1% to 4% based on the location. It will not exceed Taka 1,080,000 per
katha (1.65 decimal) for land, additional Taka 600 per square meter for any structure,
building, flat, apartment or floor space on the land, if any, or 4% of the deed value,
whichever is higher.
Collection of tax shall not apply to the following:

i) sale by a bank or any financial institution as a mortgagee empowered to sell;
ii) mortgage of any property to the Bangladesh House Building Finance Corporation
against loan; and
iii) transfer of property to a trust or special purpose vehicle established only for the
purpose of issuing sukuk approved by government or Securities Exchange
Commission and vice versa.
▪ Collection of tax from lease of property (Section 53HH)
Any registering officer responsible for registering under the Registration Act, 1908 (XVI
of 1908) any document in relation to any lease of immovable property for not less than
ten years from any authority formed or established under any law or from any other
person shall not register such document unless tax is paid at 4% by the lessor on the
lease amount of such property.
Authority mean Rajdhani Unnayan Kartipakkha (RAJUK), Chattogram Development

Authority (CDA), Rajshahi Development Authority (RDA), Khulna Development
Authority (KDA) or National Housing Authority.
▪ Interest on deposits of Post Office Saving Bank Account (Section 53I)
Tax is to be withheld at 10% from interest of Post Office Savings Bank Account.
▪ Rental value of vacant land or plant or machinery (Section 53J, Rule 17BB)
5% tax to be withheld from all such rent.
▪ Advertisement of newspaper or magazine or private television channel (Section

53K)
Taxes are to be withheld at 4% from the advertising bill of newspaper or magazine or

private television channel, or private radio station, or any web site etc.
▪ Transfer of share by sponsor shareholders of a company listed with stock

exchange (Section 53M)
The Securities & Exchange Commission (SEC) is to collect tax at 5% on the difference
between transfer value and face value of the share(s) at the time of transfer shares of a
sponsor shareholder or director of a company listed with a stock exchange.
- 'transfer' includes transfer under a gift, bequest, will or an irrevocable trust; and
- ‘transfer value' shall be deemed to be the value of shares based on the closing price
of shares prevailing on the day of consent accorded by the Securities & Exchange
Commission or the Stock Exchange, as the case may be, or where such shares
were not traded on the date of such consent, the closing price of the last day when
such shares were traded.
▪ Collection of tax from transfer of share of shareholder of Stock Exchange

(Section 53N)
The Principal Officer of a stock exchange shall deduct tax at 15% on any profits and
gains arising from the transfer of share of shareholder of stock exchange at the time of
transfer or declaration of transfer or according consent to transfer of such share,
whichever earlier.
For the purpose of the computation of profits and gains of share, the cost of acquisition
of such share shall be the cost of acquisition incurred before Exchanges
Demutualisation Act, 2013 (Act No. 15 of 2013) came in force.
▪ Deduction of tax from any sum paid by real estate developer to landowner
(Section 53P)
Any person engaged in real estate or land development business pays any sum to the
land owner on account of signing money, subsistence money, house rent or in any other
form called by whatever name for the purpose of development of the land of such owner
in accordance with any power of attorney or any agreement or any written contract, such
person shall deduct tax at the rate of 15% on the sum so paid at the time of such
payment.
▪ Deduction from dividend payments (Section 54)
The principal officer of a company shall deduct tax at the time of payment of dividend to
a shareholder at the following rates if the shareholder is a resident assessee -
(i) if the shareholder is a company at the rate of 20%.

(ii) if the shareholder is a person other than a company at the rate of 10% if twelve-
digit Taxpayer’s Identification Number (e-TIN) is furnished and 15% if not.
Provided that the provision of this section shall not be applicable to any distribution of
taxed dividend to a company (resident and non-resident) if such taxed dividend enjoys
tax exemption under the provisions of the paragraph 60 of Part A of the Sixth Schedule.
“Taxed dividend” means the dividend income on which tax has been paid by the
recipient under this Ordinance”.
▪ Lottery and crossword puzzles (Section 55)
Taxes are to be deducted from the amount of winnings payable at the rate of 20%.
▪ Income paid or payable to non-resident (Section 56)
Under this section firm, project, program, joint venture, trust, cooperative society and
public-private partnership are also treated as deducting authority along with any person.
In case of applicability of reduced or nil withholding tax as per double tax treaty or any
other reason, a certificate needs to be collected from NBR. Time limit has been specified
for issuing exemption or reduced rate certificate by NBR to 30 days after submission of
all required documents.
Tax deducted under this section shall be deemed to be the minimum tax liability of the
payee and it shall neither be refunded nor be set off or adjusted against any demand.
Relevant government regulatory authority will ask for applicable tax on capital gain
arising from the transfer any share of a company.
Applicable withholding tax rates of certain services are stated below:
Sl. Description of service Tax rate

1 Advisory or consultancy service 20%
2 Pre-shipment inspection service 20%
Professional service, technical services, technical know-how or
3 20%
technical assistance
Architecture, interior design or landscape design, fashion design or
4 20%
process design
5 Certification, rating etc. 20%
Charge or rent for satellite, airtime or frequency, rent for channel
6 20%
broadcast
7 Legal service 20%
8 Management service including event management 20%
9 Commission 20%
10 Royalty, licence fee or payments related to intangibles 20%
11 Interest 20%
Sl. Description of service Tax rate

12 Advertisement broadcasting 20%
13 Advertisement making or Digital Marketing 15%
Air transport or water transport (other than the carrying services
14 7.5%
mentioned in sections 102 or 103A)
Contractor or sub-contractor of manufacturing, process or conversion,
15 7.5%
civil work, construction, engineering or works of similar nature
16 Supplier 7.5%
17 Capital gain 15%
18 Insurance premium 10%
19 Rental of machinery, equipment etc. 15%
Dividend-
20 (a) company, fund and trust 20%
(b) any other person not being a company, fund and trust 30%
21 Artist, singer or player 30%
22 Salary or remuneration 30%
23 Exploration or drilling in petroleum operations 5.25%
24 Survey for coal, oil or gas exploration 5.25%
24A Fees, etc. of surveyors of general insurance company 20%
Any service for making connectivity between oil or gas field and its
25 5.25%
export point
26 Any payments against any services not mentioned above 20%
27 Any other payments 30%
▪ Consequence of failure to deduct, collect etc. (Section 57)
a) Person/company responsible for making deduction shall be treated as assessee in

default in respect of tax not deducted.
b) In addition to above, the required person shall be liable to pay:
i) the amount of tax that has not been collected or deducted;

ii) the amount of tax which was required to be collected or deducted;
iii) the amount of tax which has not been paid after deduction; and
iv) an additional amount 2% per month on the above amount as mentioned in
(i), (ii) and (iii) at below manner:
- In case of failure to deduct, collect or deduction at lower rate, an additional
amount 2% per month form the due date of the deduction or collection to
the date of the payment of the amount; and
- In case of failure to deposit after deduction, an additional amount 2% per
month for the date of deduction to the date of payment.
However, periods for which additional amount is calculated shall not exceed
24 months.
▪ Consequence of issuance of certificate of tax deduction/collection without actual

deduction/collection/payment (Section 57A)
The person who is responsible for deduction shall be personally liable to pay the amount
which not being deducted/collected or paid to the Government. In such case, DCT shall
take necessary actions for the collection of the amount from the responsible person
after giving him a reasonable opportunity of being heard.
Note that deduction/collection made under above sections shall have to be deposited
to Govt. Exchequer as follows:
Time of deduction/collection Due date of payment

Deduction made during July to May of a Within 2 weeks from the end of the month of
year such deduction/collection
Deduction made during 1 June to 20 Within 7 days from the date of such
June of a year deduction/collection
*Deduction made during 21 June to 30 Following day from the date of such
June deduction/collection
*However, if the deduction/collection was made in the last two working days of the
month of June of a year, the payment shall be made on the same day of such
deduction/collection.
11. International Tax

11.1 Double Taxation Avoidance Agreement
There are agreements on avoidance of double taxation between Bangladesh and 37

countries which are:
1 UK 20 Poland
2 Singapore 21 Philippines
3 Sweden 22 Vietnam
4 Republic of Korea 23 Turkey
5 Canada 24 Norway
6 Pakistan 25 USA
7 Romania 26 Indonesia
8 Sri Lanka 27 Switzerland
9 France 28 Oman (air traffic only)
10 Malaysia 29 Mauritius
11 Japan 30 United Arab Emirates
12 India 31 Myanmar
13 Germany 32 Kingdom of Saudi Arabia
14 The Netherlands 33 Kingdom of Bahrain
15 Italy 34 Republic of Belarus
16 Denmark 35 Nepal
17 China 36 Bhutan
18 Belgium 37 Morocco
19 Thailand
11.2 Double Tax Relief
A foreign tax credit is available to a Bangladesh resident in respect of any taxes paid in a
foreign jurisdiction on the same income being taxed in Bangladesh. The allowable credit is
the lower of the foreign tax paid or the Bangladesh tax otherwise payable.
No provision exists for carry forward or carry-back of excess tax credits.
12. Value Added Tax

12.1 Registration or Enlistment Requirements
Business entities having turnover within a 12-month period exceeding Taka 5,000,000 will be
required to enlist for Turnover Tax and entities having turnover within a 12-month period
exceeding Taka 30,000,000 will be required to register for VAT.
The following entities will be required to register for VAT regardless of the turnover
threshold:
i) Supplier, manufacturer or importer of goods or services which are subject to

supplementary duty;
ii) Supplier of goods or services through tender, contract or work order;
iii) Importer and exporter; and
iv) Any other person recommended by the National Board of Revenue (NBR). NBR has
issued a general order prescribing that manufacturers or traders and service providers
of 175 certain goods and services would have to be registered mandatorily.
Any person who will not be eligible for either Registration or Enlistment will be effectively
exempted from VAT. However, such persons can voluntarily register for VAT.
*Provided that in pursuance of section 4 (2d) of VAT & SD Act 2012 NBR can give VAT
registration requirement to any person regardless of the registration threshold.
▪ What constitutes “Turnover”?
VAT & SD Act 2012 defines turnover as all money received or receivable by a business
entity against supply of taxable goods or rendering of taxable services by means of their
economic activities.
For the purpose of assessing the eligibility for Registration and Enlistment, Turnover
shall not include:
− The value of an exempted supply,

− The value of sale of a capital asset,
− The value of supply made as a consequence of permanently closing down an
economic activity, and
− The value of sale of an organisation of economic activities or portion thereof.
▪ Unit Registration vs Central Registration
Unit Registration is mandatorily required when different goods or services are supplied
from different locations. Furthermore, if identical or similar goods or services are
supplied from different locations and the related books and records are kept at separate
locations, Unit Registration is also mandatory.
Option of Central Registration is available when identical or similar goods or services

are supplied from different locations and the books and records are maintained
centrally.
It is implied that different goods or services supplied from a single location would
consequently be under one registration.
Furthermore, transfer of goods or services between one unit to another unit by a

centrally registered person will not be considered as supplies. As a result, this internal
transaction will not result in output VAT liability and input VAT credit.
▪ Economic Activity
VAT & SD Act 2012 imposes VAT based on “economic activity”. The VAT & SD Act 2012
defines economic activity as any activity carried on regularly or continuously for making
supply of any goods, services or immovable property. The definition of economic activity
also includes:
i) any business, profession, vocation, means of earning livelihood, manufacturing or

undertaking of any kind;
ii) supply of any goods, services or properties made under any lease, license or similar
arrangement; and
iii) one-off initiative in the nature of a commercial activity or enterprise.
However, any service rendered by an employee to his employer or any service rendered by
any director of a company in general or any recreational pursuit or hobby performed on a
non-commercial basis or any activity carried on by the Government without any commercial
motive are excluded from the definition of economic activities.
Exempted Supplies Taxable Import

VAT & SD Act 2012 provides VAT Any import other than exempted
exemption on certain goods and imports.
services in the First Schedule of the Import is defined as bringing any
Act goods from outside Bangladesh into
the geographical territory of
Bangladesh.
Taxable Supplies Imported Services

Taxable Supply means any supply, Imported service means supply of any
excluding exempted supplies, made in service from outside Bangladesh
an economic activity. Supply includes
supply of goods, services and
immovable property.
12.2 Coverage of VAT
▪ VAT Exempted Goods
VAT & SD Act 2012 provides VAT exemption on certain goods and services through
the First Schedule of the legislation as well as specific exemptions through statutory
orders.
▪ VAT Exempted Services
The VAT & SD Act 2012 provides VAT exemption on certain services as per First
Schedule of the legislation which are broadly categorised as follows:
i) Basic services for livelihood - agricultural services e.g. farming, irrigation of

farmlands, storage of agricultural goods and animal products excluding
warehouses, etc.
ii) Social services - e.g. Government and private healthcare services, Government
education services etc.
iii) Cultural services - e.g. radio or television broadcasting, publication and sale of
books, magazine, newspaper and government Gazette.
iv) Financial services - stock or security exchange institution, life insurance policy and
deposit or savings at banks or financial institutions, activities related to settlement
of purchase and sales of share.
v) Transportation services - e.g. passenger transport, goods transport, airlines,
ambulance services except certain cases such as shipping agent, courier services,
freight forwarder, charterer of aircraft or helicopter, Air-ambulances related services
etc.
vi) Personal services - e.g. journalist, actor, singer, driver, operator, designer, etc.
vii) Other services - e.g. services for any religious activity or programs, land purchase
or transfer and its registration, stevedoring activities, etc.
▪ Zero-rated VAT
i) Supply of zero-rated goods
— Supply of any goods from inside to outside Bangladesh,

— Temporarily imported goods,
— Deemed export,
— Supply of goods for repair, maintenance or modification and supply of stores
or spare parts for ocean-going ship and aircraft engaged in international
transport.
Deemed exports are supplies of ingredients for goods or services for consumption
outside Bangladesh and supply of any goods or services within the territory of
Bangladesh against foreign currency through an international tender or under local
letter of credit.
ii) Supply of zero-rated services
— Services given physically on goods situated outside Bangladesh at the time

of supply of the service,
— Services given relating to temporarily imported goods under the Customs Act,
— Service is exported outside of Bangladesh,
— Services given to a recipient situated outside Bangladesh at the time of
supply,
— Supply of telecommunication services by a telco supplier to a non-resident
telco supplier.
12.3 Type of VAT Rates
▪ Standard VAT rate
The standard VAT rate under VAT & SD Act 2012 is 15%.
Input VAT credit can only be obtained against supplies of goods or services subject to
15% VAT.
▪ Trade VAT
Traders are subject to VAT at a rate of 5% on their supplies except traders of medicine
and petroleum products for which reduced trade VAT of 2.4% and 2%, respectively, is
applicable.
Goods and services subject to truncated VAT rate will not be eligible for input VAT
credit.
Suppliers of goods and services subject to trade VAT rate can choose to exercise
standard VAT rate of 15% and get input VAT credit against their purchase.
▪ Advance Tax
Importers are required to pay Advance Tax at 5% on taxable imports on the value
determined for taxable imports. Such Advance Tax can be shown as decreasing
adjustment within the concerning VAT period or 4 succeeding VAT periods.
Advance Tax (AT) for import of materials to be used in the production/manufacture of

goods is 3% subject to fulfilment of the following conditions in accordance with General
Order no. 10/Mushak/2020:
— VAT Registration Certificate as manufacturer.

— Input- output Coefficient attested by Divisional Commissioner
— Bill of entry.
— Import Registration Certificate (IRC)
— Last 12 months’ VAT returns.
▪ Truncated VAT
VAT & SD Act 2012 prescribes VAT rates lower than the standard VAT rate of 15%,
commonly known as Truncated VAT system, in the Third Schedule of the legislation.
Truncated VAT rates are as follows:
— 5% (e.g. mustard oil, biscuits, plastic products, indenting firm, ride sharing
services)
— 7.5% (e.g. non-air-conditioned hotel or restaurant, procurement provider,
construction contractor)
— 10% (e.g. printing press, security service, building, floor, compound cleaning or
maintenance service provider)
— For building construction firm
− Up to 1,600 sq. ft. at 2%;
− Exceeding 1,600 sq. ft. at 4.5%; and
− Reregistration irrespective of size at 2%.
Goods and services subject to Truncated VAT rate will not be eligible for input VAT
credit.
Business entities whose supplies are subject to Truncated VAT can choose to exercise
the standard VAT rate of 15% and claim input VAT credit against their purchase.
▪ Specific VAT (Tariff Value VAT)
Certain goods and services are subject to tariff value-based VAT such as SIM cards,
mild steel products, newsprint etc.
12.4 VAT Mechanism
▪ VAT Payment through VAT Return
Registered persons under VAT & SD Act 2012 is required to pay their net VAT payables,
if any, (i.e. output VAT less input VAT and other adjustments) at the time of submission
of VAT Return within 15 days following the month end. The following equation will be
used for calculation of VAT liability:
Output VAT
+ Supplementary Duty, where applicable
+ Increasing Adjustments
- Input VAT Credit
- Decreasing Adjustments
= Net Tax Payable
▪ Input-Output Coefficient Declaration
In case of supply of goods Input-Output Coefficient Declaration in Form 4.3 needs to be

filled. Subsequently, a copy of Input-Output Coefficient Declaration should be sent to
the concerned commissioner office within 15 days by Deputy Commissioner of Tax
(DCT) along with his/her recommendation.
The Input-Output Coefficient Declaration will not be applicable for 100% export-oriented
organisations for its exportable goods.
▪ Adjustments
The following increasing adjustments can be made against output VAT and
Supplementary Duty payable in a tax period, subject to fulfilment of specific conditions,
time limit and method namely:
(a) an increasing adjustment in respect of withholding tax;

(b) interest, penalty, Fine, fee and outstanding VAT will be treated as increasing
adjustment;
(c) Less/short deposit of VAT amount of any previous tax period shall be treated as
increasing adjustment;
(d) an increasing adjustment required for an annual re-calculation;
(e) an increasing adjustment if a payment is not made through banking channels;
(f) an increasing adjustment for goods put into private use;
(g) an increasing adjustment on being registered;
(h) an increasing adjustment on cancellation of registration;
(i) an increasing adjustment for a change in the VAT rate;
(j) an increasing adjustment for the payment of any interest, monetary penalty, fine,
fee, etc; and
(k) any other prescribed increasing adjustment.
The following decreasing adjustments can be made against output VAT and
Supplementary Duty payable in a tax period, subject specific conditions, time limit and
method namely:
(a) a decreasing adjustment for the money paid as advance tax;

(b) a decreasing adjustment in respect of withholding VAT against supply by the.
Supplier;
(c) a decreasing adjustment applicable as a result of an annual re-calculation;
(d) a decreasing adjustment for issuing credit note;
(e) a decreasing adjustment where there is a decrease in the VAT rate;
(f) a decreasing adjustment claimed for a negative net amount carried forward from
a previous tax period;
(g) a decreasing adjustment allowed for VAT overpaid in a previous tax period; and
(h) any other prescribed decreasing adjustment.
▪ Input VAT Credit
A registered person shall be entitled to an input VAT credit for any taxable import or
taxable supply made to the person for conducting their economic activities and taxable
supplies.
VAT & SD Act 2012 restricts to input VAT credit on the following cases, namely:
(a) supply exceeds Taka 100,000 and paid other than banking channel;
(b) output VAT not mentioned in the return, in the case receipt of import services;
(c) input tax credit is not taken within 4 succeeding tax period of purchase or invoice
date or bill of entry;
(d) good and services under the custody or possession or supervisor of another person
(e) goods and services have not been entered in Purchase Books;
(f) name, address and BIN of both purchaser and seller are not mentioned in tax
invoice;
(g) in case of imported goods, if the Bill of Entry Number is not in importer invoice and
description of goods does not match with Bill of Entry and invoice;
(h) raw materials or goods released with furnish Bank Guarantee;
(i) input tax paid for manufacturing of exempted or rendering of exempted services;
(j) turnover tax paid under the purview of turnover tax;
(k) supplementary duty paid for manufacturing of goods and services;
(l) except Export of goods or service, any input VAT paid on supply of goods or service
for which Output VAT rate is less than 15% or Specified VAT;
(m) input tax paid against such inputs or goods not declared in the Input Output
Coefficient;
(n) if new Input Output Coefficient is not submitted when input price change 7.5%;
(o) if sales price of the product is less than total input cost; and
(p) purchase of passenger vehicle or entertainment services, provided that, input VAT
credit may be allowed when such purchases are part of normal course of the
economic activities of the person (e.g. dealer or charterer of vehicles).
▪ Partial Input Tax
If a registered person is not entitled to full input VAT credit, their entitlement to input
VAT credit against total imports and acquisitions shall be calculated in a proportionate
manner as follows:
I × T/A
where—
“I” is the total amount of input tax originating from imports or acquisitions;
“T” is the amount paid by a registered person on all taxable supplies during the tax
period; and
“A” is the amount paid by the registered person on all the supplies during a tax period.
Also, when a registered person pays or is liable to pay a part of the consideration for a
taxable supply, any input tax credit to which the person is entitled shall be calculated on
the basis of the amount of the consideration such person pays or is liable to pay.
Partial input tax calculated on monthly basis is provisional. Annual increasing/

decreasing adjustments can be made for the calendar year with the approval of VAT
Commissioner considering the above factor on annual basis.
▪ Withholding VAT implication on sub-contract project
For any project, the VAT has to be collected or deducted and deposited to Government
Treasury at the time of payment of service value or commission by a person receiving
the service. If the service provider appoints any sub-contractors, agents or any other
service rendering persons, VAT shall not be collected at source again from such sub-
contractors, agents or any other service rendering persons appointed by the main
service provider; subject to production or submission of documentary evidence of early
stage’s collection or deduction of VAT and the deposit of such VAT to the Government
Treasury. However, this rule is not applicable for purchasing goods under the project.
The above provision was present in the old VAT Act 1991 under subsection 4AA of the
section 6. However, when the new VAT regulation (i.e. the VAT & SD Act, 2012) came
into effect from 1 July 2019, this important provision was not incorporated.
Consequently, considering the importance of this law for the project contractors, it has
now been reintroduced into the new VAT regulation
▪ Withholding VAT
VAT & SD Act 2012 has imposed upon certain business entities the responsibility to
withhold VAT.
Sub-section 21 of section 2 of VAT & SD Act 2012 defined withholding entity to mean-
a) a Government entity (ministry, board, authority, semi-government, autonomous

body, state owned entity, local authority or similar types of institutes);
b) a non-government organisation approved by the NGO Affairs Bureau or the
Directorate-General of Social Welfare;
c) a bank, insurance company or a similar financial institution;

d) a post-secondary educational institution; or
e) a limited company.
▪ Applicability of withholding VAT
If the applicable rate for the supply of goods is less than 15%, entire VAT is subject to
withholding. In case of supply of services, withholding VAT will be applicable for all the
services which are prescribed for withholding VAT. Currently. 43 services as listed
below are categorized for withholding VAT. Moreover, if the applicable VAT rate for any
service is less than 15%, it would be subject to withholding VAT even if it is not
mentioned in prescribed withholding VAT list.
List of services for withholding VAT
A comprehensive list of services for withholding VAT is set by the National Board of
Revenue (NBR). The list of services which are subject to withholding VAT are stated
below:
Sl. Service Description of services VAT rate

Code
S001.10 Hotel (Air-conditioned) 15%
S001.20 Restaurant (Air-conditioned) 10%
1
S001.10 Hotel (Non-AC) 7.5%
S001.20 Restaurant (Non-AC) 5%
2 S002.00 Decorators and caterers 15%
3 S003.10 Motor car garage and workshop 10%
4 S003.20 Dockyard 10%
5 S004.00 Construction firm 7.5%
6 S007.00 Advertising firm 15%
7 S008.10 Printing press 10%
8 S009.00 Auction firm 10%
9 S010.10 Land developer 2%
Building construction firm
Up to 1,6 00 square feet 2%
10 S010.20
Above 1,600 square feet 4.5%
Reregistration irrespective of size 2%
11 S014.00 Indenting agency 5%
12 S015.10 Freight Forwarders 15%
13 S020.00 Survey firm 15%
14 S021.00 Plant or capital machinery rental firm 15%
Furniture distributors
a. Manufacturing stage 7.5%
(if manufacturer directly delivers to consumer – VAT
15 S024.00 15%)
b. Selling stage (showroom) (subject to 7.5% VAT 7.5%

challan at manufacturing stage, otherwise 15%)
16 S028.00 Courier and express mail service 15%
17 S031.00 Repair and maintenance service firm 10%
18 S032.00 Consultancy and supervisory firm 15%
19 S033.00 Lessor 15%
Sl. Service Description of services VAT rate

Code
20 S034.00 Audit and accounting firm 15%
21 S037.00 Procurement provider 7.5%
22 S040.00 Security service 10%
23 S043.00 Program aired through television or online platform 15%
24 S045.00 Legal advisor 15%
Transport contractor:
25 S048.00 i) Transportation of petroleum products 5%
ii) Others 10%
26 S049.00 Rent-a-car service provider 15%
27 S050.10 Architect, interior designer or interior decorator 15%
28 S050.20 Graphic designer 15%
29 S051.00 Engineering firm 15%
30 S052.00 Sound and lighting accessories provider 15%
31 S053.00 Board meeting participants 15%
32 S054.00 Advertisement through satellite channel 15%
33 S058.00 Chartered air or helicopter rental firm 15%
34 S060.00 Buyer of auctioned goods 7.5%
Cleaning and maintenance services of floors, 10%
35 S065.00
compounds etc.
36 S066.00 Seller of lottery ticket 10%
37 S067.00 Immigration Advisor 15%
38 S071.00 Event management 15%
39 S072.00 Human resource supplier or management 15%
40 S099.10 Information technology enable services 5%
41 S099.20 Miscellaneous services 15%
42 S099.30 Sponsorship services 15%
43 S099.50 Credit rating agency 7.5%
▪ No requirement of withholding VAT
Sl. Cases Description

Supply of Supply of goods at 15% with VAT invoice 6.3 (Mushak 6.3) will
1
goods not be subject to withholding VAT
Supply of services which are not included in the prescribed
Supply of withholding VAT list will not be subject to withholding if it is
2
services supplied at 15% with VAT invoice 6.3 (Mushak 6.3)
Supply of certain utilities such as Fuel, Gas, Water (WASA),
3 Utilities Electricity, Telephone, Mobile bill will not be subject to withholding
VAT
Supplies of goods and services which are exempted under the
Exempted
4 First Schedule of the VAT and SD Act, 2012 will not subject to
supplies
withholding VAT
Any supplies which are considered zero rated as per section 21
Zero rated
5 of the VAT and SD Act, 2012 will not be subject to withholding
supplies
VAT
In case of supply of advertisement service and Program aired
Supply of
through television or online platform included in withholding VAT
withholding
6. list, if service provider provides VAT invoice (Mushak - 6.3)
VAT list
attested by the concerned revenue officer, there is no requirement
services
of withholding VAT.
▪ Adjustment of withholding VAT
Suppliers shall make decreasing adjustment on the tax withheld by the customer within
the same tax period and the next tax period of which payment is received.
If VAT claim is not adjusted within such time limit, it will expire due time bar. Withholding
VAT adjustment will be made through the withholding VAT Certificate (Mushak 6.6).
▪ Guidelines of withholding VAT entity at the time of making payment to vendor
A withholding entity being the service recipient will deposit the withheld VAT amount to
the Government Treasury through treasury challan within 15 days after making payment
to the vendor. After that, within three 3 days the withholding entity will issue three copies
of withholding VAT Certificate (i.e. Mushak 6.6). The original copy of withholding VAT
Certificate with original treasury challan should be submitted to the concerned VAT
office at the time of submission of VAT Return. One copy of the withholding VAT
Certificate is to be provided to the supplier and other copy is to be preserved by the
withholding entity for at least 5 years.
Now all registered and unregistered withholding entity deposit the withholding VAT to
the government treasury within 15 days of the deduction as prescribed in withholding
VAT regulation. There is no relationship between VAT return and deposit of withholding
VAT.
▪ Reverse charge of VAT for importation of services
VAT & SD Act 2012 provides clear provisions for VAT on imported services under the
concept of Reverse Charge.
Imported service is a taxable supply in the hand of the service recipient and
consequently, it has to be shown as output VAT in the VAT Return. Simultaneously, the
service recipient will be required to show the applicable VAT on such imported service
as their input VAT in the VAT Return. As such, there would be no cash flow impact for
imported service.
▪ Collection of VAT on importation of service
Banks which are responsible for sending money against importation of services from
outside of Bangladesh will check whether applicable VAT on importation of services has
been deposited to the Government Treasury or not. Based on the status of importer’s
VAT registration, the control mechanism is as follows:
Types of service
Sl. Control mechanism
importer
Bank will collect VAT at 15% on the imported price from the
Unregistered unregistered person at the time of sending the fund outside
1
person Bangladesh and deposit it to the concerned bank’s
Commissioner Economy Code
Bank will not collect VAT at 15% on imported service if the
registered person submits a copy of the treasury challan for
Registered the payment of corresponding amount of VAT on imported
2
person service. If there is no treasury challan or the amount deposited
is less, bank will collect required amount of VAT and deposit
it to its Commissioner Economy Code.
12.5 Value of taxable supply
▪ Determination of value of taxable supply
− Taxable supply
The value of a taxable supply is the amount derived by reducing the tax fraction
VAT Rate
( ) from the consideration amount.
100+VAT Rate
Consequently, value of any supply other than the taxable ones shall be the
consideration of such supplies.
− Imported services
As per an amendment brought by Finance Act 2020, value of imported services
shall be the consideration of such supplies.
− Taxable import of goods

Import of goods will be valued at the Assessable Value determined by the Customs
Authority plus the amount of Customs Duty, Regulatory Duty or Supplementary
Duty.
It is also required to file Input-Output Coefficient Declaration to the VAT authority.
− Special cases
If any taxable supply is made or imported service is taken from an associated entity,
the value of such transaction would be the fair market value of that taxable supply
or imported service if:
i) the taxable supply or imported service is made for no consideration or

consideration lower than the fair market value, and
ii) the associated entity cannot claim input VAT credit on the taxable supply or
imported service.
Also, taxable supplies with no consideration will be valued at the fair market value
of the supply reduced by the tax fraction.
▪ Fair market price
VAT & SD Act 2012 introduces the concept of fair market price. According to the
legislation, fair market price is the consideration arrived at as a result of normal
relationship between a buyer and a seller who are not associated with each other. If
such price is not identifiable, consideration of similar supply made previously under
similar circumstance would then be the fair market value. If the price cannot be derived
by the above means, it may be determined by NBR based on impersonal average of
consideration in course of normal business relations among buyers and sellers, who are
not associated with one another.
▪ Definition of associated entities
Associated entities mean two persons with such a relation between them that it would
make one act or reasonably expect to act in accordance with the intention of the other
or make both act or reasonably expect to act in accordance with the intention of a third
person. Associated entities also include the following persons, namely–
i) a partner of a partnership;
ii) a shareholder of a company;
iii) a Trust and a beneficiary of such Trust;
iv) a joint venture for property development and the landowner as a partner of that
joint venture, builder, or other related person; and
v) representative, VAT Agent, distributor, licensee or persons with similar
relationship.
Associated entities but do not include persons with employment relations.
▪ When is fair market price relevant?
In the context of the VAT & SD Act 2012, fair market price is relevant in the following
scenarios:
— to determine the value of free samples above the allowable limit of Taka 20,000 per
fiscal year;
— when assessing the consideration of imported services obtained from or supplied by
a related person;
— when taxable supply is made to an associate for no consideration or consideration
which is less than fair market price and also the associate cannot take full input VAT
credit;
— supplies of service or immovable property to any employee without a consideration
or at a price less than the fair market price;
— imposition of SD on the supply of any goods or service subject to SD which is made
without any consideration or with inadequate consideration;
— when quantity of goods subject to SD is identified during an audit to have not been
accounted properly; and
— transfer of immovable property by a property developer to the landowner.
12.6 Few important matters
▪ Defining Residents
In case of individuals, “resident" will mean an individual who–

a) normally lives in Bangladesh; or
b) stays in Bangladesh for more than 182 days in a current calendar year; or
c) stays in Bangladesh for more than 90 days in a calendar year and has stayed in
Bangladesh for more than 365 days during the four immediately preceding
calendar years.
In other cases, resident will include the following:

a) a company incorporated in Bangladesh or having its centre of control and
management in Bangladesh;
b) a Trust, if a Trustee thereof is a resident of Bangladesh or the centre of control
and management of the Trust is in Bangladesh;
c) an association of persons other than a Trust, if it is formed in Bangladesh or its
centre of control and management in Bangladesh;
d) all Government entities; and
e) a property development joint venture.
Any other person is a Non-resident.
▪ Defining Fixed Place
VAT & SD Act 2012 defines fixed place to include, namely—

a) a place of management;
b) a branch, an office, a factory, or a workshop;
c) a mine, a gas well, a quarry for extraction of stones or any other similar mineral
resource; and
d) a location of any construction or installation project.
▪ Implications of Residency Status
The prime implication of residency status is that if a non-resident is carrying out an

economic activity from or through a fixed place in Bangladesh and provides any supply
from such a fixed place, such activity or supply would be considered as an economic
activity or supply in Bangladesh and will be subject to VAT. A non-resident having no
fixed place of business in Bangladesh would not be required to register for VAT for their
compliance of VAT obligations, if any, but they have to appoint a VAT Agent in order to
discharge their VAT obligations.
▪ VAT Agent
A non-resident can appoint a VAT Agent who will bear and carry all VAT related
responsibilities arising out of the activities performed by the non-resident. The VAT
Agent will obtain a VAT Registration in the name of the principal (or the non-resident)
for the concerned economic activities. However, non-resident shall be liable for all
payments including taxes, fines, penalties, and interests.
▪ Cancelled Transaction
If a transaction is cancelled, the amount of money which may be retained by the supplier
will be subject to VAT. Furthermore, such VAT may be adjusted in the VAT Return.
▪ In-kind Benefits
The price of supply of an in-kind benefit by a registered person or person required to be

registered to any of their employees will be subject to VAT under the VAT & SD Act
2012.
If a service or an immovable property without a consideration or at a price less than the

fair market price is given to the employees, the value of such service or such immovable
property shall be its fair market price.
Input VAT credit can also be obtained on in-kind benefits.
▪ Definition of Input
As per section 2 (18ka) of VAT & SD Act 2012, input means all raw materials, laboratory
reagents, laboratory equipment, laboratory accessories, any particular used as fuel,
packing materials, services, machines and parts of machines. Following goods and
services will not be considered as input:
- Land, labour, building, office equipment and fixtures, buildings/ infrastructures

construction, maintenance, repair, renovation
- All furniture, office supplies, stationary materials, refrigerator, air conditioner, fan,
lighting materials, generator purchase and repair
- Interior design, architecture planning and design
- Lease and rental payments for transportation
- Travelling, entertainment, goods and services related to employee welfare related
activities
- Rentals for office premises and showrooms
In case of business by the trader, any goods imported, purchased, acquired or collected
by any means for the sale, exchange or transfer will be considered as “input
▪ Definition of Company
As per section 2 (38) of VAT & SD Act 2012, company means any company registered
in Bangladesh or registered under prevailing act of another country. According to an
amendment brought by Finance Act 2020. foreign companies are also now within the
definition of company.
▪ Definition of Procurement Provider

Procurement providers are all suppliers except manufacturers who supply taxable
goods and services to withholding entities
▪ Carry Forward and Refund

Negative net tax payable for a tax period can be carried forward for 6 tax periods.
Afterwards, if the negative net tax payable is not fully adjusted and the remaining
amount is greater than Taka 50,000, it can be claimed as cash refund within 3 months
from the date of application. If the remaining negative net tax payable is less than Taka
50,000, it can be carried forward indefinitely.
Refund can be claimed only after submission of all VAT Returns up to the current tax
period.
▪ Progressive or Periodic Supplies

VAT & SD Act 2012 defines “progressive or periodic supplies” as any supply under
contract, lease, hire purchase or license (including finance lease) on the condition of
progressive or periodic payment of consideration.
VAT imposed on such supplies becomes payable at the earliest of:

a) when separate invoices are issued for each such supply;
b) when consideration against each such supply is received in part or in full;
c) when the price against the series of supplies becomes payable; and
d) the first day of the tax period to which the payable consideration relates, if it is
possible to ascertain the payable amount at that time.
▪ Is there VAT on sale of business?
The previous VAT legislation contained provisions regarding fulfilment of certain VAT
obligations prior to the transfer of ownership of a business. VAT & SD Act 2012 further
clarifies these obligations by providing clearer instructions for transfer of ownership of a
business.
Furthermore, if a business is purchased with an intention to keep the economic activities

associated with it to be continued, such transfer of ownership will not be regarded as a
taxable supply. Similarly, if any part of the business is sold on a going concern basis it
would be treated in the same manner.
▪ Is there VAT on disposal of assets?
The previous VAT legislation did not provide clear definitions or clarifications for
applicability of VAT on sale of used goods. VAT & SD Act 2012 defines second-hand
goods as goods (except precious metal or goods made from precious metal) which have
been used previously.
VAT is applicable on second-hand goods. However, VAT & SD Act 2012 provides the
opportunity to adjust such VAT against the output VAT if the second-hand goods are
purchased for re-sale (without any manufacturing activities). This implies that under the
new legislation, VAT paid on second-hand goods not for re-sale will be a cost.
12.7 VAT Documentations
▪ Filing of Return
VAT Returns are required to be filed within 15 days following the end of the month or
tax period (for Turnover Tax—following the end of quarter).
If the last day (i.e.15th day) for the submission of VAT return is a “public holiday”, the
next working day will be considered as the deadline for the submission of VAT return.
A late VAT Return may be filed by obtaining extension from the VAT Authority which is
limited up to 1 month. Nevertheless, interest will be applicable at a rate of 1% per month
on the amount of VAT payable, if VAT Return is submitted after the prescribed 15 days.
Government can extend the return submission date without any penalty or interest due
to epidemic, natural disaster or war in public interest.
VAT & SD Act 2012 also includes a provision for Amended Return for clerical error or
computational errors. Amended Return can be submitted before completion of 4 years
from the date of filing of the relevant return or before commencement of audit by VAT
Authority.
The taxpayer will have to pay interest on the difference between the amount of tax
payable as per the Amended Return less the amount of tax initially paid.
If any taxpayer fails to submit the monthly VAT return within the prescribed time limit,
Commissioner will issue a notice through VAT Form 11.1 (Mushak 11.1) to the taxpayer
to submit the late VAT Return.
If the defaulting taxpayer does not submit the late VAT Return within 21 days of the
notice, Commissioner will issue a VAT Assessment Order through VAT Form 11.2
(Mushak 11.2).
For failure of submission of late VAT Return within 21 days of the stipulated time period,
the Board will temporarily lock the BIN including suspension of import and export
activities through automatic VAT online system and transactions of source tax
deductible supply. With submission of VAT Return, BIN will automatically be unlocked
within two days of the submission.
Submission of audited financial statements:
Audited Financial Statements of limited company shall require to be submitted within 6

months after the end of current financial year. However, in rational case, concerned
commissioner may extend for further 6 tax months on application made by the company,
▪ Mushak Forms
VAT & SD Act 2012 prescribes new templates and forms for VAT compliance and
submissions. The following are some of the important forms relevant to business
entities:
Form name Form description

Mushak 2.1 Registration form for VAT and Turnover Tax
Mushak 2.2 Registration form for Branch/Division
Mushak 2.3 Registration Certificate for VAT/Turnover Tax
Mushak 2.4 Cancellation or Amendment of Registration/ Enlistment
Mushak 2.5 Final Return on Cancellation of Registration/ Enlistment
Mushak 3.1 Registration of VAT Agent
Mushak 3.2 Registration Certificate of VAT Agent
Mushak 3.4 Delegation of Power to VAT Agent by Non-resident Person
Mushak 4.3 Input-Output Coefficient Declaration
Mushak 4.4 The settlement of VAT on unused goods
Mushak 4.5 The settlement of VAT on the destruction of goods due to accident
Mushak 6.1 Purchase Register
Mushak 6.2 Sales Register
Mushak 6.2.1 Purchase-Sale Register
Mushak 6.3 Tax Invoice
Mushak 6.5 Goods Transfer Invoice for Centrally Registered Entity
Mushak 6.6 Withholding Tax Certificate
Form name Form description

Mushak 9.1 VAT Return
Mushak 9.2 Turnover Tax Return
Mushak 11.1 Late VAT Return
Mushak 11.2 Assessment Order for VAT
▪ Tax Invoice
Every VAT registered supplier is required to issue two copies of Tax Invoice on or before
the date when VAT becomes payable on the taxable supply containing the following
information, namely:
a) the date and time of issue of the invoice;

b) the name, address and Business Identification Number of both the supplier and
the buyer if the supply value is greater than Taka 25,000;
c) description of the goods or services,
d) quantity of the goods supplied;
e) the value of the supply (exclusive of VAT and inclusive of VAT);
f) the VAT rate applicable to the supply;
g) the amount of payable VAT;
h) any other information prescribed by the Board;
i) the SD rate; and
j) the name and nature of transport.
Tax invoices should be serialised fiscal year wise. Notably, if supply is made from
multiple locations, Tax Invoice should also be serialized for each location. This serial
number along with the name and address of the location should be mentioned in the
Tax Invoices for the supplies made from those locations. The original Tax Invoice (i.e.
Mushak- 6.3) should be present while making transportation of the goods.
The registered person can preserve in his own format Tax Invoice including additional
information for the requirement of his business where all information in the prescribed
form shall be included and shall be issued in the prescribed number of minimum copies.
Moreover NBR, by a notification in the official Gazette, can declare any Tax Invoice or
bill issued by a registered person in his/her own format as a Tax Invoice (i.e. Mushak
6.3).
▪ Withholding Certificate
A registered person, who makes a supply to a withholding entity shall on or before the
date of making such supply, issue to the withholding entity a Withholding VAT
Certificate containing the prescribed information.
The form and manner of the Withholding VAT Certificate shall be prescribed by the
Board.
▪ Books and Records
VAT & SD Act 2012 allows all prescribed documents to be customized according to the
company’s formats or templates.
VAT & SD Act 2012 requires the registered and enlisted persons to complete
accounting, reporting and auditing under International Financial Reporting Standards,
International Accounting Standards and International Standards on Auditing. For tax
determination all documents which depict the operation of business should be
considered.
VAT & SD Act 2012 requires records and accounts to be maintained for at least 5 years.
In case of unsettled VAT disputes, all the relevant documents and records shall be kept
until the settlement of the disputes.
▪ Appeal and Revision
(a) Appeal to the Commissioner (Appeal)
Applicant: Any person or any VAT officer who is aggrieved by a decision taken or
order issued under the VAT regulation by any Additional Commissioner or any VAT
officer below the rank of an Additional Commissioner.
Timeline: Appeal must be made within 90 days from the date of the service of such
decision.
Deposit of tax at the time of filing: The applicant other than VAT officer will be
required to pay 20% of the tax specified in the impugned order at the time of filing.
Disposal of the case: The Commissioner (Appeal) shall dispose of the appeal within
a period not exceeding 1 year.
(b) Appeal to Appellate Tribunal
Applicant: Any person or any VAT officer who is aggrieved by a decision taken or
order issued under the VAT regulation by any Commissioner or Commissioner
(Appeal) or Director-General or by any VAT officer holding the same rank.
Timeline: Appeal must be made within 90 days from the date of the service of such
decision.
Deposit of tax at the time of filing: The applicant other than VAT officer will be
required to pay 20% of the tax specified in the impugned order at the time of filing.
Provided that, this 20% tax will not be required to be paid if the appeal is made
against the order issued by the Commissioner (Appeal)
Disposal of the case: If the Appellate Tribunal fails to dispose of the appeal within a
period of 2 years, the appeal shall be deemed to have been granted by the Appellate
Tribunal.
▪ VAT Software
NBR has made it mandatory for registered entities having turnover exceeding Taka
50,000,000 in the preceding financial year to maintain their VAT related books and
records in software prescribed by the VAT authority. In order to comply with this
provision, only software from NBR approved software developers or suppliers should
be used. Entities may also use their own personal software provided it has the same
specifications as prescribed by NBR and after obtaining approval from NBR.
Bangladesh
Contact us:
Adeeb H. Khan Ali Ashfaq M Mehedi Hasan
Senior Partner Partner Partner
T: +880 2 2222 86450 – 2 T: +880 2 2222 86450 – 2 T: +880 2 2222 86450 – 2
E: adeebkhan@kpmg.com E: aliashfaq@kpmg.com E: mehedihasan@kpmg.com
kpmg.com/socialmedia kpmg.com/app
© 2021 Rahman Rahman Huq and KPMG Advisory Services Limited are
entities registered in Bangladesh and members of the KPMG global
organisation of independent member firms affiliated with KPMG
International Limited, a private English company limited by guarantee. All
rights reserved. Printed in Bangladesh.
The KPMG name and logo are registered trademarks or trademarks of

KPMG International.

KPMG Taxation Handbook

Uploaded by

Copyright:

Available Formats

KPMG Taxation Handbook

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

KPMG Taxation Handbook

Uploaded by

Copyright:

Available Formats

kpmg Bangladesh

About KPMG in Bangladesh

Current and recent clients of KPMG in Bangladesh include:

- Grameenphone - Eriell Oil Field Services - Reckitt Benckiser - Cemex

Rahman Rahman Huq and KPMG Advisory Services Limited are

3. Personal income tax 9

5.28 Donation to technical and vocation institution 43

6. Penalty and prosecution for non-compliance 46

10. Income subject to tax withholding/deduction/collection at source 52

11. International Tax 69

12. Value Added Tax 70

We hope you will find this booklet useful.

Residents including non-resident Bangladeshi

Total income Tax rate

*Initial exemption limit for:

Please see section 3.2 for the definition of resident.

Minimum tax payable

Minimum tax payable by an assessee is as follows:

Location Minimum tax

Total net worth Rate

Rate for owner of small or cottage industry

Particulars Rate of rebate

Tax rates applicable for owners of motor car (Section 68B)

Type and engine capacity of motor car Tax payable (Taka)

2.2 Corporate tax rates

[If non-listed companies other than banks, insurance companies, merchant

50% of export income is exempt from tax.

Surcharge in addition to above tax is applicable on business income. 2.5%

2.3 Reduced rates of Corporate Tax applicable to certain industrial companies

2.4 Reduced tax rates applicable to local authority

1. WASA (Dhaka, Chattogram, 13. BIWTA

2.5 Capital gains tax

2.5.1 Capital gains tax on sale of shares of listed companies

Sl. Particulars Rate

2.5.3 Capital gains tax on transfer of entirety of business or undertaking

Capital gains is computed by reducing consideration or fair value (whichever is higher) by

2.6 Tax on dividend/remittance of profit

A company paying dividend shall withhold tax at the rate of

However, in cases where dividend is payable to a shareholder resident in a country with

2.7 Tax on retained earnings (Section 16G)

2.8 Applicability of tax rates

2.9 Charge of additional tax (Section 16B)

2.11 Filing of tax return (Section 75)

Filing of tax return is compulsory for every person who:

shareholder employee of a company, a partner of a firm, an employee of the

▪ if a person is required to have Twelve-Digit Taxpayer’s Identification Number under

- an educational institution receiving government benefits under Monthly Payment

3. Personal income tax

An individual is treated as a resident of Bangladesh if that person stays in Bangladesh for

Residence is determined in Bangladesh purely on the period of presence in Bangladesh

3.3 Taxable income

3.4 Requirement of twelve-digit Taxpayer's Identification Number (e-TIN) (Section 184A)

It has been made compulsory to submit e-TIN certificate, acknowledgement receipt of

▪ opening a letter of credit for the purpose of import;

▪ registration, change of ownership or renewal of fitness of a car, jeep or a microbus;

▪ purchasing savings instruments (Sanchayapatra) exceeding Taka 200,000;

3.5 Issuance of e-TIN without application and re-registration

▪ Twelve-digit Taxpayer’s Identification Number (e-TIN) may be issued without any

3.6 Issuance of Temporary Registration Number (TRN)

3.7 Universal self-assessment (Section 82BB)