FAQ , Taxation

What is the policy for income tax for foreign investors operating in Bangladesh?

Oct 12, 2021

Income tax regime is governed by the Income Tax Ordinance, 1984 (amended annually by the Finance Act) and a number of Statutory Regulatory Orders (SROs). The government has progressively lowered general Corporate Income Tax (CIT) rate (currently, 30% for unlisted company and 25% for listed companies except some specific sectors) over the past decades. Capital gains are taxed separately at a general rate of 15%. CIT regime is regarded as standard based on usual determination of taxable income and deductible expenses, but shows differences from other countries in the application of: i) differentiated tax rates (whether limited liability company or proprietorship business, publicly-listed or not, and depending on sector), ii) advance/ presumptive payments. Bangladesh applies a presumptive taxation to certain types of incomes. Proceeds of goods export are to be withheld at source against FOB value, for example. Withholding practices also apply to proceeds of services, payments of goods import, royalty/ technical license fees, dividend, interest for loan and other fees. These withheld taxes are advanced payment in nature, thus become credited against final tax assessment. Turnover tax (0.6% of gross receipts except for particular sectors) exists as well, that can be levied on all companies, irrespective of taxable income and potential loss, constituting a minimum obligation. Any companies in Bangladesh are mandated to register and obtain Taxpayer Identification Number (TIN) from the National Board of Revenue (NBR) for the purpose of income tax reporting/ filing.