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Bangladesh Income Tax

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					                               Bangladesh Income Tax

Bangladesh personal income tax rates for assessment year 2010 - 2011 is progressive up
to 25%.


Bangladesh Income Tax Rates for individuals other than female taxpayers, senior
taxpayers of 65 years and above and retarded taxpayers - Assessment Year 2010 - 2011

First           BDT 1,65,000          Nil
Next            BDT 2,75,000          10%
Next            BDT 3,25,000          15%
Next            BDT 3,75,000          20%
Rest Amount                           25%


Bangladesh Income Tax Rates for female taxpayers, senior taxpayers of age 65 years and
above - Assessment Year 2010 - 2011

First           BDT 1,80,000          Nil
Next            BDT 2,75,000          10%
Next            BDT 3,25,000          15%
Next            BDT 3,75,000          20%
Rest Amount                           25%


Bangladesh Income Tax Rates for retarded taxpayers - Assessment Year 2010 - 2011

First           BDT 2,00,000          Nil
Next            BDT 2,75,000          10%
Next            BDT 3,25,000          15%
Next            BDT 3,75,000          20%
Rest Amount                           25%


Minimum tax for any individual assessee is Tk. 2,000
Non-resident Individual: 25% (other than non-resident Bangladeshi)
On Dividend income: 20%

Income tax is one of the main sources of revenue in Bangladesh. It is a progressive tax
system. Bangladesh Income tax is imposed on the basis of ability to pay. The more a
taxpayer earns the more tax he should pay. This is the basic principle of charging income
tax in Bangladesh. The tax system aims at ensuring equity and social justice. Tax rates in
Bangladesh also differs between male and female individuals.
Time to submit income tax return: Unless the date is extended, by the 30th day of
September next following the income year.


Who should submit Income Tax Return ?

- If total income of any individual (other than female taxpayers, senior taxpayers of 65
years and above and retarded taxpayers) during the income year exceeds Tk 1,65,000/-.
- If total income of any female taxpayer, senior taxpayer of 65 years during the income
year exceeds Tk 1,80,000/-
- If total income of any retarded taxpayer during the income year exceeds Tk 2,00,000/-.
- If any person was assessed for tax during any of the 3 years immediately preceding the
income year.
- A person who lives in any city corporation/paurashava/divisional HQ/district HQ and
owns a building of more than one storied and having plinth area exceeding 1,600 sq.
feet/owns motor car/owns membership of a club registered under VAT Law.
- If any person subscribes a telephone.
- If any person runs a business or profession having trade license and operates a bank
account.
- Any professional registered as doctor, lawyer, income tax practitioner, Chartered
Accountant, Cost & Management Accountant, Engineer, Architect and Surveyor etc.
- Member of a Chamber of Commerce and Industries or a trade Association.
- Any person who participates in a tender.
- A person who has a Taxpayer's Identification Number (TIN).
- Candidate for Union Parishad, Paurashava, City Corporation or Parliament elections.
- Any company registered under Companies Act, 1930 or 1994


Bangladesh Corporate Tax Rates

The standard rate of corporate tax in Bangladesh is 27.5% in 2010 - 2011 tax year. This is
the standard corporate tax rate applicable to publicly traded companies in Bangladesh,
a list including tax rates for other corporations are as follows:

Publicly Traded Company                       27.5%
Non-publicly Traded Company                    37.5%
Bank, Insurance & Financial Company             42.5%
Mobile Phone Operator Company                   45%
Publicly Traded Mobile Operator Company           35%

If any publicly traded company (excluding Mobile Operator Company) declares more
than 20% dividend, 10% rebate on total tax allowed.
Tax Rebate for investment

Rate of Tax Rebate:

Amount of allowable investment is either actual investment in a year or up to 25% of
total income or Tk. 10,00,000/-
whichever is less. Tax rebate amounts to 10% of allowable investment.

Types of investment qualified for the tax rebate are:
- Life insurance premium ,
- Contribution to deferred annuity ,
- Contribution to Provident Fund to which Provident Fund Act, 1925 applies ,
- Self contribution and employer's contribution to Recognized Provident Fund ,
- Contribution to Super Annuation Fund ,
- Investment in approved debenture or debenture stock, Stocks or Shares ,
- Contribution to deposit pension scheme approved by the government,
- Contribution to Benevolent Fund and Group Insurance premium ,
- Contribution to Zakat Fund ,
- Donation to charitable hospital approved by National Board of Revenue ,
- Donation to philanthropic or educational institution approved by the Government ,
- Donation to socio-economic or cultural development institution established in
Bangladesh by Aga Khan Development Network ,
- Donation to ICDDR,B, Dhaka Community Hospital,
- Donation to philanthropic institution- CRP, Savar, Dhaka,
- Donation upto five lac to (1) Shishu Swasthya Foundation Hospital Mirpur, Shishu
Hospital, Jessore and Hospital for Sick Children, Satkhira run by Shishu Swasthya
Foundation, Dhaka, (2) Diganta Memorial Cancer Hospital, Dhaka, (3) The ENT and
Head-Neck Cancer Foundation of Bangladesh, Dhaka; and (4) Jatiya Protibandhi
Unnayan Foundation, Mirpur, Dhaka;
- Asiatic Society of Bangladesh;
- Muktijudha Jadughar;


Income Tax Authorities in Bangladesh

Income Tax Authorities in Bangladesh are:
- National Board of Revenue,
- Director General of Inspection (Tax),
- Commissioner of Taxes (Appeals),
- Commissioner of Taxes (LTU)
- Director General (Training),
- Director General Central Intelligence Cell (CIC),
- Commissioner of Taxes,
- Additional Commissioner of Taxes (Appeal/Inspecting),
- Joint Commissioner of Taxes(Appeal/Inspecting ),
- Deputy Commissioner of Taxes,
- Assistant Commissioner of Taxes,
- Extra Assistant Commissioner of Taxes,
- Inspectors of Taxes.



Tax Withholding Functions

In Bangladesh withholding taxes are usually termed as Tax deduction and collected at
source. Under this system both private and public limited companies or any other
organization specified by law are legally authorized and bound to withhold taxes at
some point of making payment and deposit the same to the Government Exchequer.
The taxpayer receives a certificate from the withholding authority and gets credits of tax
against assessed tax on the basis of such certificate.



Tax Rebate for Investment

Rate of Rebate: Amount of allowable investment is either up to 25% of total income or
BDT 500,000 whichever is less. Tax rebate amounts to 10% of allowable investment.
Types of investment qualified for the tax rebate are:

- Life insurance premium
- Contribution to deferred annuity
- Contribution to Provident Fund to which Provident Fund Act, 1925 applies
- Self contribution and employer's contribution to Recognized Provident Fund
- Contribution to Super Annuation Fund
- Investment in approved debenture or debenture stock, Stocks or Shares
- Contribution to deposit pension scheme
- Contribution to Benevolent Fund and Group Insurance premium
- Contribution to Zakat Fund (Zakat: Islamic Tax)
- Donation to charitable hospital approved by National Board of Revenue
- Donation to philanthropic or educational institution approved by the Government
- Donation to socioeconomic or cultural development institution established in
Bangladesh by Aga Khan Development Network
Assessment Procedures

- For a return submitted under normal scheme, assessment is made after hearing.
- For returns submitted under Universal Self Assessment Scheme, the acknowledgment
slip is determined to be an assessment order. Universal Self Assessment is of course
subject to audit.



Appeal against the order of DCT

A taxpayer can file an appeal against DCT's order to the Commissioner (Appeals) /
Additional or Joint Commissioner of Taxes (Appeals) and to the Taxes Appellate Tribunal
against an Appeal order.



Major Areas for Final Settlement of Tax Liability in Bangladesh

Tax deducted at source for the following cases is treated as final discharge of tax
liabilities. No additional tax is charged or refund is allowed in the following cases:

- Supply or contract work
- Band rolls of hand made cigarettes
- Import of goods
- Transfer of properties
- Export of manpower
- Real Estate Business
- Export value of garments
- Local shipping business
- Royalty, technical know-how fee
- Insurance agent commission.
- Auction purchase
- Payment on account of survey by surveyor of a general insurance company
- Clearing & forwarding agency commission.
- Transaction by a member of a Stock Exchange.
- Courier business
- Export cash subsidy



Tax Holiday
Tax holiday is allowed for certain industrial undertaking, tourist industry and physical
infrastructure facility established between 1st July 2008 to 30th June 2011 in fulfillment
of certain conditions.




Bangladesh Value Added Tax (VAT) Rates



The general rate of Value Added Tax (VAT) in Bangladesh is 15%.


- Value Added Tax (VAT) is imposed on goods and services at import stage,
manufacturing, wholesale and retails levels;
- A uniform VAT rate of 15% is applicable for both goods and services;
- 15% Value Added Tax (VAT) is applicable for all business or industrial units with an
annual turnover of Taka 2 million and above;
- Turnover tax at the rate of 4% is leviable where annual turnover is less than BDT 2
million;
- Value Added Tax is applicable to all domestic products and services with some
exemptions;
- Value Added Tax (VAT) is payable at the time of supply of goods and services;
- Tax paid on inputs is creditable / adjustable against output tax;
- Export is VAT exempt;
- Cottage industries (defined as a unit with an annual turnover of less than BDT 2 million
and with a capital machinery valued up to BDT 300,000) are exempt from Value Added
Tax;
- Tax returns are to be submitted on monthly or quarterly or half yearly basis as notified
by the Government.


June 16, 2011
Income Tax and Corporate Tax in Budget 2011-12

To ensure equitable development throughout the country and provide better services to
the people, several steps have been proposed in the budget 2011-12 for the
Simplification of Tax Payment 152 augmentation of income tax collection from domestic
sources, simplification and modernisation of the system for filing of income tax return
and payment of tax.
Threshold level for individuals is proposed to taka 1,80,000 from taka 1,65,000.
Comparative tax rates is as below:Existing Tax Rates       Proposed Tax Rates
Level of Income (Taka)        Tax Rate       Level of Income (Taka)      Tax Rate
up to 1,65,000          0%              up to 1,80,000              0%
1,65,001 - 4,40,000     10%        1,80,001 - 4,80,000      10%
4,40,001 - 7,65,000     15%        4,80,001 - 8,80,000            15%
7,65,001 - 11,40,000 20%          8,80,001 - 11,80,000            20%
above 11,40,000               25%             above 11,80,000           25%

The proposed rate for cigarette manufacturers to be increased to 42.5 per cent to
discourage smoking.


Finance Minister proposed to introduce submission of acknowledgement receipt of
return submission side by side TIN certificate in certain cases, introduce online service
for payment of tax through specified banks against registration or renewal of fitness of
car/motor vehicle, organise tax fair from 17-22 September 2011 in all divisional
headquarters to provide one-stop service for submission of return and introduce
provision.

Tax holiday incentive proposed up to June, 2013 and list of 17 categories industrial
undertakings eligible for tax holiday. Active pharmaceuticals ingredient industry and
radio pharmaceuticals industry, Barrier contraceptive and rubber latex, basic chemicals
or dyes and chemicals, basic ingredients of electronic industry, bio-fertilizer,
biotechnology, boilers, Compressors, computer hardware, energy efficient appliances,
insecticide or pesticide, petro-chemicals, pharmaceuticals, processing of locally
produced fruits and vegetables, radio-active application industry, textile machinery and
tissue grafting.

Also propose to withdraw tax holiday incentives for industries set up in Dhaka,
Narayangonj, Gazipur and Chittagong districts to avoid human and traffic congestion , to
ensure balanced industrialisation and to encourage setting up of new industries in
backward areas.

Tax holiday facility will be available for 10 years for rapid transit, toll road, elevated
expressway, deep sea port, IT parks, Hi-tech park, renewable energy and ICT village or
software technology zone.

Proposed to repeal the SRO related to reduced tax rates for certain industries being a
duplication of the tax holiday incentive and rationalize the scope of Corporate Social
Responsibility (CSR) to encourage its compliance in the budget. Proposed to ensure
inter-company loan to be transacted through bank and put a limit on amount spent by
the companies for purchase of car or jeep on the basis of paid up capital.
To rationalise the source tax rates for registration of flat, building or space of real estate
developers on the basis of residential or commercial purposes. To consider as capital
asset any land property situated in the district of Dhaka, Gazipur, Narayanganj or within
the jurisdiction of RAJUK, CDA, KDA, RDA, City Corporation, Paurashava and Cantonment
Board. The rate of tax deduction at source from all export proceeds to 1.5%, instead of
0.40%/0.50% and rate of tax deductible at source for brokerage commission of stock
brokers listed with Stock Exchange from 0.05% to 0.10%.

Finance Minister proposed in budget 2011-2012 to raise the tax rate from 5% to 10% of
disputed tax for filing appeal to Taxes Appellate Tribunal and from 10% to 25%/50% for
filling reference to High Court. To make provision giving authority to Commissioner of
Taxes to waive the tax payment requirement in proper cases.

				
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