Who is subject to Bangladesh Income Tax?
Ø Every company, Branch office, liaison office, representative registered in Bangladesh must file an annual tax return to National Board of Revenue (NBR).
What does a company need to file?
Ø Annual Company tax return is provided information regarding company’s income, expense, net profit before tax, assets and liabilities. It is also used to determine tax liability, Tax deducted at source etc.
How much tax will a company owes?
Ø The tax liability of a company in Bangladesh depends on the activity and legal status of particular company. Income tax rate is varying according to company’s types of business activity and legal status of the company. The Rate of income tax and corresponding legal status of the are given below:
Types of Company
Rate of taxes on profit
Private limited company, Non listed company. Non Resident Company
Publicly traded Listed Company in stock exchanges
Publicly traded bank, insurance and non Banking Financial institution
Non- Publicly traded bank, insurance and non Banking Financial institution
Cigarette Manufacturing Company
Tobacco Product Manufacturing Company
Mobile operator Company
Tax rate is 15% on capital gain.
Company must paid minimum tax @0.3% tax on their gross receipt, if their normal tax (that specified in above table) liability fall less than minimum tax.
How can Company’s taxes be reduced?
Ø A company can get benefit of reduced taxes in numerous ways. Different kinds of reduced tax benefits are given below:
i) offset taxable loss and carry forward up to six years,
ii) given depreciation allowances,
iii) Tax exemption given on newly established ” industrial undertakings”
iv) Tax exemption given on income of “ tourist industry”
v) Tax exemption given on newly established “physical infrastructure facility”.
vi) Tax exemption given those company, if those manufacturing company set up their plant in the area under “Bangladesh Export processing zone Association” (BEPZA).
vii) If any Company converts it as a public limited company by transferring 20% of its paid up capital to stock exchange by Initial public offering (IPO), then those public company get 10% tax rebate for the year of IPO.
viii) Income of Company’s provident fund and gratuity income are exempted , if their provident
Fund and gratuity fund are approved from NBR.
ix) Company get rebate on their approved Corporate Social Responsibility (CSR) Activity.
What is the time limitation for a company to file income tax return?
Ø A company tax payer must file their annual tax return by the 15th day of the seven month following the close of its tax year. Example: if a company accounting year end on 30 June, 2015 then last time of filling return is 15 January, 2016. A company taxpayer may get extension time period after the permission of Deputy Commissioner of taxes.
Ø A company is making payment to their suppliers, service providers, and salary to employees for different purposes. According NBR rules, a company must deduct tax on source on their payment on specific rate and deposit the same to the government exchequer. It is also known as Withholding Tax. A Company must file a withholding tax return on every six month (December & June).Withholding tax return included all payment amount which are subject to TDS and a copy of treasury challan. Details of TDS rate will be found in this link: www.fmcibd.com/FMCI_VAT_RATES.pdf
Ø A company must deduct tax from their employee’s salary on an average rate if their employees have taxable salary income and deposit the same in government exchequer through treasury challan with code of specific employee Zone. Company must show both TDS and salary amount into their Withholding tax return.
Ø Bangladesh government imposes value Added Tax (VAT) as indirect tax on usage of final Consumer. A company must take the VAT registration under specific code related their activity. Final Consumer must pay the VAT on specific product & services. Generally VAT rate is 15% on particular value of products and services. But there is some different rate of VAT due to truncated base Value. When a company is making payment for any VAT imposable goods and service they must deduct VAT at source (VDS) amount on particular products and service and deposit the same to the government exchequer through treasury challan. A company must file VAT return including all those VDS amount deposit in government exchequer with corresponding amount of value of product and services. Detail rate of VDS on corresponding product and Services: www.fmcibd.com/FMCI_VAT_RATES.pdf
For a more comprehensive discussion and guideline regarding Bangladesh Tax system Please contact us