Individual Tax

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Tax Compliance

Tax Compliances in Bangladesh













Tax Compliance in Bangladesh

This Guide will provide you with a step by step overview of the taxation system of Bangladesh as well as the procedures, and the timeline for the tax compliance in Bangladesh. Please note that this guideline are the general requirements. There may be additional obligations depending on the type of entities and the functions of the entities.

Private Limited Company/ Public limited Company/ Joint Venture Tax compliance-Step by step guidelines:

Step 1 of Tax Compliance in Bangladesh: Tax Identification Number (TIN)

  • Tax Identification Number (TIN) is issued by the National Board of Revenue (NBR) which is a unique 12 digit identification number.
  • The Tax Identification Number (TIN) determines that tax office and its subdivision where Private Limited Company/ Public limited Company/ Joint Venture has to report.
  • For Collection Tax Identification Number (TIN) for company the following copies of documents are needed-

                           i.     Trade License

                           ii.     Incorporation Certificate

                          iii.     Memorandum of Associations

                          iv.     Articles of Associations

Step 2 of Tax Compliance in Bangladesh: Day to day compliance activities:

  • Reviewing all invoices to be received from the suppliers, vendors and service providers and calculating the applicable amount of withholding tax.
  • Depositing withholding tax to the relevant government authorities along with the relevant challans within specific time period.
  • Collecting receipts copies of the relevant challans.
  • Preserving copies of the relevant challans for future reference and submission to the relevant governmental authority.

Step 3 of Tax Compliance in Bangladesh: Monthly Compliance Activities

  • Monthly Withholding / Tax Deducted at Source(TDS) Statement Submission (excluding Salary TDS)

                           i.     Preparing monthly withholding Statement.

                           ii.     Arranging relevant withholding tax challans for onward         submission to respective tax circle office along with Withholding (TDS) statement.

                          iii.     Submitting Monthly TDS Statement along with treasury and        withholding challans.

                          iv.     Collecting and preserving receipt copy of monthly TDS   Statement and,

                           v.     Providing documents and explanation as per the requirements of the respective Deputy Commissioner of taxes (DCT).

 

  • Monthly Withholding (TDS) Statement Submission (Salary TDS)

                             i.     Preparing monthly withholding Statement for salary expenses.

                           ii.     Arranging relevant withholding tax challans for salary expenses onward submission to respective tax circle office along with Withholding (TDS) Statement.

                          iii.     Submitting monthly TDS Statement for salary expenses along with treasury and withholding challans.

                          iv.     Collecting and preserving receipt copy of monthly TDS return for salary expenses and,

                            v.     Providing documents and explanation for salary expenses as per the requirements of the respective Deputy Commissioner of taxes (DCT).

Step 4 of Tax Compliance in Bangladesh: Quarterly Compliance Activities:

  • Quarterly Advance Income Tax Computation and Submission.

                             i.     Computation and assisting in payment of advance income tax.

 

  • Quarterly Accounting Reporting

                             i.     Preparing Quarterly Return as per Bangladesh Bank and Bangladesh Investment Development Authority and National Board of Revenue.

                           ii.     Take necessary steps to submit the Financial Statements with govt. authority (e.g. Bangladesh Investment Development Authority, Bangladesh Bank and National Board of Revenue as and when applicable).

 

Step 5 of Tax Compliance in Bangladesh: Semi Annually Compliance Activities

a)     Preparing semi-annual statement for withholding tax.

b)     Arranging relevant withholding tax challans for onward submission to tax office along with withholding tax return.

c)     Submitting the withholding tax return to respective income tax office.

d)     Collecting and preserving receipt copy of the withholding tax return, and,

e)     Providing documents and explanation as per the requirements of Deputy Commissioner of Taxes (DCT).

 

Step 6 of Tax Compliance in Bangladesh: Annually Compliance Activities

a)     Annual return submission U/S 108 regarding payment of Salary

                             i.     Preparing Sec.-108 return of Annual Information regarding annual payment of Salary and withholding salary tax over the period.

                           ii.     Submission of Annual Information regarding payment of Salary to NBR u/s 108

                          iii.     Collecting and preserving receipt copy of the withholding tax return, and,

                          iv.     Providing documents and explanation as per the requirements of Deputy Commissioner of Taxes.

b)     Annual return submission U/S 109 regarding payment of Interest

                        i.         the name and address of every person to whom such payment has been made, or was due, during the preceding financial year

                       ii.         the amount of payment so made or due; and

                     iii.         such other particulars as may be prescribed

c)     Annual return submission U/S 110 regarding payment of Dividend

                        i.         the name and address of every shareholder, as entered in the register of shareholders, to whom a dividend or the aggregate of dividends has been paid or distributed during the preceding financial year if such payment exceeds such amount as may be prescribed;

                       ii.         the amount of dividend or dividends so paid or distributed; and

                     iii.         such other particulars as may be prescribed

d)     Annual corporate tax return Submission

In Bangladesh, companies are required to file return of income tax as per Income Tax Ordinance, 1984. When the companies are filing tax return to the NBR, the following procedures should be followed-

                             i.     Collecting necessary information for tax computation and tax return preparation.

                           ii.     Computing annual tax.

                          iii.     Preparing the annual corporate tax return, and,

                          iv.     Submitting the annual corporate tax return along with all necessary documents to the tax office within specific time period.

The following documents are needed to be submitted at the time of submission of the annual tax return.

                             i.     Audit Report: The return should be accompanied by an audited statement of accounts and a computation sheet explaining the difference between the profit or loss shown in the statement of accounts and the income shown in the return. The financial statement should be audited in accordance with BAS and BFRS by a Chartered Accounting firm enlisted by Institute of Chartered Accountants of Bangladesh and the Audit must be conducted in accordance with BSA.

                           ii.     Withholding Tax Return: There should be a copy of return of Withholding tax collected or deducted. Withholding tax collected or deducted should be submitted to the DCT two times during the financial year in prescribed manner.

                          iii.     Pay Order of Remaining Tax: The return should be accompanied by a copy of Pay order of the remaining balance amount of tax. The pay order should be in favor of Deputy Commissioner of Taxes under whose jurisdiction the company is an assessee.

                          iv.     Advance Tax Payment Copy: Also, there should be copy of payment of advance tax with return. The company has to pay advance tax quarterly during each financial year.

                            v.     Bank Statements: With return, there should be Statements from all Banks used for commercial transactions in the name of the Company.

All these documents have to be submitted to NBR within specified dates. FM Consulting International can help your entity to arrange all of them in a professional and timely manner. Failure to submit the mentioned return within specified date can trigger several penalties including fine and imprisonment for different time periods. FM Consulting International is very keen to safeguard its clients from such hassles.

Companies also have to withhold taxes from employees as well as its suppliers and vendors and submit monthly returns to NBR. Relying on a third party for such services ensures that you can stay concentrate in your business more while remaining free of extra headaches.

Monitoring individual annual tax return submission of employee.

                        i.         Monitoring individual annual tax return submission of employee within stipulated time.

                       ii.         Collecting and preserving receipt copy of the acknowledgement copy for Bangladeshi employee

 

Step 7 of Tax Compliance in Bangladesh: Assessment

A company can assess the income tax in simplified procedure and Universal Self-Assessment Procedure.

a)     For returns submitted under simplified Procedure, assessment is made after hearing from Deputy Commissioner of Taxes (DCT).

b)     For returns submitted under Universal Self-Assessment Procedure, the acknowledgement slip is determined to be an assessment order. Universal Self-Assessment is of course subject to audit.

c)     A company’s tax liability depends on the operation and legal status of particular company in Bangladesh. Income tax rate varies depending on company's types of operations activity and legal status of the company. The applicable rate of income tax are given below:

Types of Company Rate of taxes on profit
Private limited company (not listed company) 35%
Publicly traded and listed company in stock exchanges 25%
Publicly traded bank, insurance and non-banking financial institution 40%
Non- Publicly traded bank, insurance and non-banking financial institution 42.5%
Merchant Bank 37.5%
Mobile phone operator company 45%
Cigarette and Tobacco product manufacturing company 45%


 

Step 8 of Tax Compliance in Bangladesh:

Appeal Tribunal in the general sense is any person or institution with the authority to judge, adjudicate on, or determine claims or disputes – whether or not it is called a tribunal in its title.


Under the provisions of the Ordinance, Deputy Commissioner of Taxes (DCT) shall assess the total income of the Company on the basis of the return and determine the tax payable by it on the basis of such assessment and communicate the assessment order to the company within thirty days.


Generally NBR, the prime authority of the country, is responsible to audit and appeal against person and companies in Bangladesh.


If the company wishes, then it can appeal against the order of the DCT to the Commissioner (Appeals) within forty-five days of the order.


If the company is aggrieved by the order of the Commissioner (Appeals), it may wish to appeal to the Appellate Tribunal.


The assessee or the Commissioner may, within ninety days from the date of receipt of the order of the Appellate Tribunal refer to the High Court Division any question of law arising out of the order of the Appellate Tribunal. If the judgment of the High Court Division is varied in appeal, effect shall be given to the order of the Appellate Division.

Tax Compliance in Bangladesh | FMCI

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