Constitution Bangladesh
http://ittefaq.com.bd/content/2010/05/31/news0435.htm
1.Bangladesh Finance Minister http://www.mof.gov.bd/en/index.php?option=com_content&view=article&id=107&Itemid=1 2. Bangladesh Bureau of statistics http://www.bbs.gov.bd/ 3.Bangladesh Bank
4.Income Tax Ordinance 1984 http://bdlaws.gov.bd/pdf_part.php?id=672 Bangladesh-Taxes
VAT act 1991: http://www.sai.uni-heidelberg.de/workgroups/bdlaw/1991-a22.htm TAX SYSTEM OF BANGLADESH
Major heads of tax-revenues of Bangladesh are as follows:
A. Taxes on Income and Profit
1. Income tax-Companies
2. Income tax-Other than Companies
B. Taxes on Property & Capital Transfer
1. Estate Duty and Gift Tax
2. Wealth Tax
3. Narcotics Duty
4. Land Revenue
5. Stamp duty-non-judicial
6. Registration
C. Taxes on goods and services
1. Customs Duties
2. Excise Duties
3. Value Added Tax (VAT)
4. Supplementary Duty (On luxury items and in addition to VAT)
5. Taxes on Vehicles
6. Electricity Duties
7. Other Taxes and Duties (travel tax, turn over tax, etc.)
.
An Introduction to Income Tax in Bangladesh
Tax implications in each country are an important consideration for an investor. Here is an overview of taxation in Bangladesh
Among direct taxes, income tax is one of the main sources of revenue. It is a progressive tax system. Income tax is imposed on the basis of ability to pay. The more a taxpayer earns the more he should pay''- is the basic principle of charging income tax. It aims at ensuring equity and social justice.
The income tax of Bangladesh is administrated Income Tax Ordinance, 1984 and the Income tax Rules, 1984 as well as notification made under the Ordinance. The charge of tax of a person depends on its resident ship. Total world Income of a resident is charged to tax in Bangladesh. Where as a non-resident's Bangladesh income is only charged to tax in Bangladesh. There are seven heads of income. There are salary, interest on security, house property, agriculture, business and profession, capital gain and other sources. The Submission of income tax returns is generally due by 30th September in case of non-companies and by 31st December in case of companies. Assessment is made in several procedures. They are self assessment, presumptive assessment, spot assessment, pre-audit based assessment. Certain percent of self assessment cases are selected for audit. The assessee can prefer appeal if aggrieved by his assessment. There are three primary forums for appeal. They are to the Appellate Commissioner/Additional Commissioner/Joint Commissioner or to the Commission for reviews. The decisions of Appellate Commissioner/Additional Commissioner/Joint Commissioner can be challenged to the next Appellate Court named as Appellate Tribunal. Withholding tax is leviable on a number of items including contractors, imports, transfer of urban land/building, bank deposits etc. Bangladesh has Agreement on Avoidance of Double Taxation with 20 countries. Negotiation with some other countries are on way.
Income Tax Authorities:
Under the income tax ordinance 1984 the following authorities are responsible for collecting the income taxes and exercise the power of authority:
• National Board of Revenue,
• Director General of Inspection (Tax),
• Commissioner of Taxes (Appeals),
• Commissioner of Taxes (Large Taxpayer Unit)
• 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.
Sources of Income:
For the purpose of computation of total income and charging tax thereon, sources of income can be classified into 7 categories, which are as follows:
• Salaries
• Interest on securities
• Income from house property
• Income from agriculture
• Income from business or profession
• Capital gains
• Income from other sources.
Computation of Total Income:
43. (1) For the purpose of charge of tax, the total income of an assessee shall be computed in the manner provided in this ordinance.
(2) In computing the total income of an assessee, there shall be included any exemption or allowance specified in part B of the Sixth Schedule and any income deemed to be the income of the assessee under section 19, subject to the limits, conditions and qualifications laid down therein.
(3) Where the assessee is a partner of a firm, then, whether the firm has made a profit or a loss, his share (whether a net profit or a net loss) shall be taken to be any salary, interest, commission or other remuneration payable to him by the firm in respect of the income year increased or decreased respectively by his share in the balance of the profit or loss of the firm after the deduction of any interest, salary, commission or other remuneration payable to any partner in respect of the income year [* * *] and such share shall be included in his total income:
Provided that if his share so computed is a loss, such loss may be set off or carried forward and set off in accordance with the provisions of section 42.
(4) In computing the total income of any individual for the purpose of assessment, there shall be included-
(a) so much of the income of the spouse or minor child of such individual as arises, directly or indirectly,-
(i) from the membership of the spouse in a firm of which such individual is a partner;
(ii) from the admission of the minor child to the benefits of partnership in a firm of which such individual is a partner;
(iii) from assets transferred directly or indirectly to the spouse [otherwise than by way of gift or for adequate consideration] or in connection with an agreement to live apart; or
(iv) from assets transferred directly or indirectly to the minor child, not being a married daughter, by such individual [otherwise than by way of gift or for adequate consideration]; and
(b) so much of the income of any person or association of persons as arises from assets transferred, [otherwise than by way of gift or for adequate consideration], to such person or association or persons by such individual for the benefit of the spouse or minor child or both.
(5) All income arising to any person by virtue of a settlement or disposition whether revocable or not from assets remaining the property of the [settlor] or disponer, shall be deemed to be income of the [settlor] or disponer, and all income arising to any person by virtue of a revocable transfer of assets shall be deemed to be income of the transferor and shall be included in the total income of such person [.
[* * *]]
(6) For the purpose of sub-section (5),-
(a) a settlement, disposition or transfer shall be deemed to be revocable if it contains any provision for the retransfer directly or indirectly of the income or assets to the [settlor], disponer or transferor, or in any way gives the [settlor], disponer or transferor a right to resume power directly over the income or assets;
(b) the expression “settlement or disposition” shall include any disposition, trust, covenant, agreement or arrangement, and the expression [settlor] or disponer, in relation to a settlement or disposition, shall include any person by whom the settlement or disposition was made.
Tax Rate (Assessment Year- 2008-09) :
For Individual Taxpayers (Other than Company):
If an individual has been in Bangladesh for a period/period totaling 182 days or more in the income year, he/she is considered a resident. In case an individual has been in the country for 90 days in the income year and 365 days in four years preceding this year, he/she will also be considered a resident.
For individuals other than female taxpayers, senior taxpayers of 70 years and above and retarded taxpayers, tax payable for the
First 1,65,000/- ($2,375) Nil
Next 2,75,000/- ($3,957) 10%
Next 3,25,000/- ($4,676) 15%
Next 3,75,000/- ($5,395) 20%
Rest Amount 25%
For female taxpayers, senior taxpayers of age 70 years and above and retarded taxpayers, tax payable for the
First 1,80,000/- Nil
Next 2,75,000/- 10%
Next 3,25,000/- 15%
Next 3,75,000/- 20%
Rest Amount 25%
Minimum tax for any individual assessee is Tk. 2,000(About $29)
Non-resident Individual 25%
(other than non-resident Bangladeshi)
For Companies
Any income collected or gained by a company doing business in Bangladesh, whether resident or not is taxable
Publicly Traded Company 27.5%
Non-publicly Traded Company 37.5%
Bank, Insurance & Financial Company 45%
Mobile Phone Operator Company 45%
If any publicly traded company declares more than 20% dividend, 10% rebate on total tax is allowed. Tax Rebate for investment: Rate of Rebate: Amount of allowable investment is either up to 25% of total income or Tk. 5, 00,000/- ($7,195) - 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
• 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
Who should submit Income Tax Return?
• If total income of any individual other than female taxpayers, senior taxpayers of 70 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 70 years and above and retarded taxpayer during the income year exceeds Tk 1,80,000/-.
• 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 storey 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.
• 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.
Time to Submit Income Tax Return:
For Company
By fifteenth day of July next following the income year or, where the fifteenth day of July falls before the expiry of six months from the end of the income year, before the expiry of such six months. For Other than Company
Unless the date is extended, by the Thirtieth day of September next following the income year.
Consequences of Non-Submission of Return
• imposition of penalty amounting to 10% of tax on last assessed income subject to a minimum of Tk. 1,000/-
• In case of a continuing default a further penalty of Tk. 50/- for every day of delay. Assessment Procedures :
• For a return submitted under normal scheme, assessment is made after hearing.
• For returns submitted under Universal Self Assessment Scheme, the acknowledgement 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.
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.
Heads of Income Subject to deduction or collection of income tax at source with specified rates of deduction. No. Heads Section/Rule Rate Chalan in the name of
1 Salaries Section 50 deduction at average rate Respective Zone
2 Discount on the real value of Bangladesh Bank Bills Section 50A deduction at normal rate or maximum rate whichever is greater. LTU
3 Interest on securities Section 51 10%on interest or discount LTU 4 Supply of goods and execution of contracts and sub-contracts Section 52(Rule 16) nil up to 1 lac, 1-5 lacs (1%), 5-15 lacs (2.5%), 15-25 lacs 3.5% and 25 lacs and above (4%) Zone-2 (Partly) & LTU
5 Indenting commission /
Shipping agency commission Section 52 (Rule 17) 3.5% of the total receipt of indenting commission & 5% of total Shipping agency commission receipt Zone-2
6 Royalty, Fees for professional or technical services Section 52 A 10% of the fees Zone-8
7 Stevedoring agency & Security service Section 52 AA 7.5% of the fees Ctg. Zone-2
8 C & F agency commission Section 52 AAA 7.5% of the fees Zone-2
9 Sale of bandrolls ( for biri) Section 52B 6% of the value of bandrolls. Respective Zone
10 Compensation for acquisition of property Section 52C 6% of the compensation money Zone-2
11 Interest on saving instruments Section 52D 10% of the amount of interest (Current rate) Zone-2
12 Collection of tax from brick manufacturers Section 52F 1 Sec. = Tk.10,000/ for each brick field.
1.5 Sec. = Tk.12,000/ for each brick field.
2 Sec. = Tk.18,000/ for each brick field. Respective Zone
13 Commission on Letter of Credits Section 52I 5% of the amount of commission. LTU
14 Issuing & Renewal of trade licence Section 52K Tk 500/- For renewal of each Lincence Zone-3
15 Trustee fees Section 52L 10%
16 Frieght Forward agency Com. Section 52M 7.5%
17 Rental power Section 52N 4%
18 Import of goods Section 53 (Rule17A) 3% of the value of imports. Zone-2
19 Income from house property (house rent) Section 53A (Rule17B) No deduction if monthly rent is below 20,000/-
3% (if monthly rent is 20,000-40,000 Tk.) and
5% (if monthly rent is above 40,000 Tk.) Zone-2 Dha & Other outside Zone
20 Shipping business of resident Section 53AA 5% of freight Zone-2,ctg
21 Export of manpower Section 53B (Rule 17C) 10% of the service charges. Zone-2, dhk & ctg
22 Export of Knitwear Section 53BB 0.25% Zone-5
23 Member of Stock Exchange Section 53BBB 0.015% Zone-7
24 Export of goods except Knitweare & Woven garments Section 53BBBB 0.25% Zone-5
25 Sale of goods by public auction Section 53C (Rule 17D) 5% of the sale price Zone-2
26 Courier Service (Non-resident) Section 53CC 7.5% Zone-6
27 Payment to film actors and actresses Section 53D (Rule 17E) 5% of the amount paid exceeding
Tk. 36000/- Zone-2
28 Cash subsidy Section 53DD 5% Zone-5
29 Commission Fees or discount paid to distributors Section 53E (Rule 17G) 7.5% of the amount of commission. Zone-2 & LTU
30 Commission or charges paid to the agents of foreign buyers Section 53EE 4 % on the amount of commission or charges. Dhk.Zone-6, Ctg.Zone-3 and Zone of Respective Division
31 Interest on bank deposits Section 53F (Rule 17H) 10% of the amount of interest. Zone-1
32 Real Estate & Developers Section 53FF In case of Bldg. 250 per sq. meter
In case of land 5% of deed value Zone-5
33 Insurance commission Section 53G 3% on the amount of commission LTU
34 Commission paid to the Surveyors of General Insurances Section 53GG 7.5% on the amount of commission. Dhk.Zone-2, Ctg.Zone-3 and Zone of Respective Division
35 Transfer of property Section 53H (Rule 17I) 5% of the value of the property. Survey Zone Interest on Post Office Savings Bank Account Section 53I No deduction if the amount of interest does not exceeds Tk.1,50,000 and if exceeds then 10% on the amount of interest . Zone-2
36 Rent of vacant land, plant and machinery Section 53J (Rule 17BB) No deduction if monthly rent is below 15,000/-
3% (if monthly rent is 15,000 -30,000 Tk.) and
5% (if monthly rent is above 30,000 Tk.) Zone-2 37 Advertising bill of news paper, magazine, private television channel Section 53K 3% of the value of the property. Zone-5
38 Dividend Section 54 (1) Resident individual 10%, non-resident individual 25% (2) Company 15% LTU (only LTU’s files) all others Zone-2
39 Income from lottery Section 55 20% of the amount won. Zone-2
40 Income of non-resident Other than non-resident Bangladeshi} Section 56 Compny - rate applicable to the com. Other than company - maximum rate. Zone-6 Major areas for final settlement of tax liability :
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 Recovery System :
In case of non-payment of income tax demand the following measures can be taken against a taxpayer for realization of tax:-
• Imposition of penalty
• Attachment of bank accounts, salary or any other payment.
• Filing of Certificate case to the Special Magistrate.
Advance Payment of Tax :
Every taxpayer is required to pay advance tax in four equal installments falling on 15th September; 15th December; 15th March and 15th June of each year if the latest assessed income exceeds Taka three lakh. Penalty is imposed for default in payment of any installment of advance tax.
Fiscal incentives :
Following are fiscal incentives available to a taxpayer:-
a) Tax holiday : Tax holiday is allowed for industrial undertaking, tourist industry and physical infrastructure facility established between 1st July 2008 to 30th June 2011 in fulfillment of certain conditions. Industrial Undertaking Eligible for Tax holiday : (i) An industry engaged in production of textile, textile machinery, jute goods, high value garments, pharmaceuticals, melamine, plastic products, ceramics, sanitary ware, steel from iron ore, MS Rod, CI Sheet, fertilizer, insecticide & pesticide, computer hardware, petro-chemicals, agriculture machinery, boilers, compressors, basic raw materials of drugs, chemicals and pharmaceuticals. (ii) An industry engaged in agro-processing, ship building, diamond cutting. Physical Infrastructure Eligible for Tax holiday: Sea or river port, container terminals, internal container depot, container freight station, LNG terminal and transmission line, CNG terminal and transmission line, gas pipe line, flyover, mono rail, underground rail, telecommunication other than mobile phone, large water treatment plant & supply through pipe line, waste treatment plant, solar energy plant, export processing zone. Tourism Industry Eligible for Tax holiday : Residential hotel having facility of three star or more.
b) Accelerated depreciation: Accelerated depreciation on cost of machinery is admissible for new industrial undertaking in the first year of commercial production 50%, in the second year 30% and in the third year 20%.
c) Income derived from any Small and Medium Enterprise (SME) engaged in production of any goods and having an annual turnover of not more than taka twenty four lakh is exempt from tax.
d) Industry set up in EPZ is exempt from tax for a period of 10 years from the date of commencement of commercial production.
e) Income from fishery, poultry, cattle breeding, dairy farming, horticulture, floriculture, mushroom cultivation and sericulture are exempt from tax up to 30th June, 2011, subject to investing at least 10% of the exempted income that exceeds one lakh Taka, in government bonds.
f) Income derived from export of handicrafts is exempted from tax up to 30th June, 2011.
g) An amount equal to 50% of the income derived from export business is exempted from tax.
h) Listed companies are entitled to 10% tax rebate if they declare dividend of 20% or more.
i) Income from Information Technology Enabled Services (ITES) business is exempted up to 30th June, 2011.
Avoidance of Double Taxation Agreement :
There are agreements on avoidance of double taxation between Bangladesh and 28 countries which are:-
(1) United Kingdom of Great Britain and Northern Ireland, (2) Singapore (3) Sweden (4) Republic of Korea 5) Canada (6) Pakistan (7) Romania (8) Sri Lanka (9) France (10) Malaysia (11) Japan (12) India (13) Germany (14) The Netherlands (15) Italy (16) Denmark (17) China (18) Belgium (19) Thailand (20) Poland (21) Philippines (22) Vietnam (23) Turkey (24) Norway (25) USA (25) Indonesia (27) Switzerland (28) Oman
• How is the period for assessment determined?
• Income tax is levied on all companies and individuals for the previous year and payable for the year of assessment of fiscal year (July to June). If a company adopts an accounting period different from the fiscal year, the business period is a 12 month accounting period preceding the year of assessment. Taxable income is calculated after adjusting for incurred expenses in the production of income.
• Returns filed received by or due to foreign technician under contract if it is accompanied by audited accounts and certified by a chartered accountant as to the correctness of the total income of the assessee.
• Salary income received by or due to a foreign technician under contract of service approved by the NBR is fully exempted from paying tax (subject to prescribed conditions and limitations) for a period of three years from the date of his arrival in Bangladesh.
• Expenditure incurred by an employer in respect of remuneration of a foreign technician is also fully exempted from income tax (subject to stipulated conditions).
• Expenditure incurred as a remuneration payable to a foreign technician by a Bangladeshi firm carrying on the business of consultant and engineers in Bangladesh is fully exempted from tax (subject to prescribed conditions and limitations
Who is entitled to a Tax Holiday?
Tax holiday is allowed to industries subject to the relevant rules and procedures set by the National Board of Revenue (NBR) for the following period according to the location of the establishment.
In Dhaka and chittagong Divisions (excluding 3 hill districts): 5 years. In other divisions (including 3 hill districts of chittagong Division): 7 years.
The period of such tax holiday will be calculated from the month of commencement of commercial production. The eligibility of tax holiday to be determined by the NBR and the time of the commencement of commercial production is certified by the respective sponsoring agencies. The industrial establishment should be registered under the companies Act. 1994.
Tax holiday facility can be availed by industries coming into commercial production within 30 June 2000 A.D.
What are the other tax incentives in Bangladesh?
Other tax incentives: Exemption of tax on interest of foreign loan. Exemption of tax on Royalty/Technical know-how. Tax exemption on capital gains. Avoidance of double taxation. Liberal investment allowance for tax assessment.
An accelerated depreciation instead of a tax holiday of a tax holiday is allowed at the rate of 80 per cent of the actual cost of the machinery or plant from the year the plant starts production and 20 per cent for the following year provided the industry is located within a "developed area". the depreciation is 10 per cent if the industry is set up in a location considered less than a "developed area".
Accepted of returns of public limited companies:
Returns filed by the public limited companies shall be accepted as correct if it is accompanied by audited accounts and certified by a chartered accountant as to the correctness of the total income of the assessee
Salary of foreign technicians:
Salary income received by or due to a foreign technician under contract of service approved by the National Board of Revenue is fully exempted from paying tax (subject to prescribed conditions and limitations) for a period of three years from the date of his arrival in Bangladesh
Tax payable by employer on remuneration of foreign technician:
Expenditure incurred by an employer in respect of remuneration of a foreign technician is also fully exempted from income tax (subject to the stipulated conditions)
Remuneration of foreign technicians employed by the firms of consultancy and engineers:
Expenditure incurred as remuneration payable to a foreign technicians by a Bangladeshi firm carrying on the business of consultant and engineers in Bangladesh is fully exempted from tax (subject to prescribed conditions and limitations)
Facilities and Tax Incentives for Foreign Investors
General Incentives
Foreign investors are entitled to the following:
• Tax exemption on capital gains from the transfer of shares by the investing company;
• Avoidance of double taxation in case of foreign investors on the basis of bilateral agreements
• No restriction in issuing work permits to foreign nationals in Bangladesh
• Facilities for repatriation of invested capital, profits and dividends
• Provision for transfer of shares held by foreign shareholders to the local shareholders/investor with the permission of the BOI and the Exchange Control Department of the Bangladesh Bank
• Treatment of repatriable dividends as new foreign investment
• Allowing long term loan and working capital loan to foreign investors from local commercial banks ; and
• Permanent residentship to a foreign citizen investing a minimum of US$ 75,000 or equivalent amount (non.repatriable) ; similarly citi~hip to any foreign citizen investing US$ ~,000 or transferring US$ 1,000,000 to any recognized Bangladeshi financing institution (nonrepatriable).
Additional Incentives for Export Oriented/Linkage Industries
Encouraging export oriented industries is one of the major objectives of the Industrial Policy, 1991 and as such government ensures all support and co-operation on priority basis as per export policy. Some of the facilities and incentives offered are as follows:
• Concessionary duty is allowed on the import of capital machinery and spare parts for setting up export oriented industries or BMRE of existing industries. For 100 percent export oriented industries no import duty is payable;
• Facilities such as special bonded warehouse against back-to-back letter of credit or national import duty and payment of value added tax (VAT) facilities are available;
• The system of duty drawback is being simplified and streamlined. Back loan upto percent of the value against irrevocable and confirmed letters of credit/sales agreements available;
• With a view to ensuring backward linkages, export oriented industries including export oriented readymade garment industries using indigenous raw materials instead of imported ones, are given additional facilities and benefits at prescribed rates. Similar incentives are extended to the suppliers of raw materials to export oriented industries;
• The expert oriented industries are allocated foreign exchange for publicity campaigns and for opening offices abroad;
• The entire export earning from handicrafts and cottage industries is exempt from income tax. In case of all other industries, proportional income tax rebate on export earnings is given between 30 and 100 percent. Those industries which export 100 percent of their products are given tax exemption upto 100 percent;
• For manufacturing exportable commodities, import of raw materials under the Control List is allowed;
• The import of specified quantities of duty free samples for manufacturing exportable products is allowed. The quantity and value of samples an determined jointly by the concerned sponsoring agency and the National Board of Revenue;
• The local products supplied to local projects against Foreign exchange international tender are treated as indirect exports and the producer is entitled to all export facilities;
• Export oriented industries producing toys, luggage and fashion articles, electronic goods, leather goods, diamond cutting and polishing, jewellery, stationery goods, silk cloth, gift items, cut and artificial flowers and orchid vegetable processing and engineering consultaney Aces are 3dentiiied by the government thrust sectors and provided with special facilities through cash incentives, venture capital and other facilities; and
• Export-oriented industries are exempt from paying local taxes such as municipal tax.
Remittance Facilities
Remittance of profits of branches of foreign firms/companies, dividends/capital gains, salaries and savings by expatriates, royalty and technical fees, training and consultancy fees, receivables collected by shipping companies and an lines towards freight and passage can be effected through authorized dealers without prior approval of the Bangladesh bank.
Additional Incentives for EPZ Industries
In addition to the incentives and facilities available to industries in general, the industries in the Export Processing Zones are allowed to enjoy the following facilities:
• Freedom from National Import Policy restrictions;
• offshore banking facilities;
• Relocation of existing industries from abroad;
• Back to back letter of credit facility for certain types of industries for import of raw materials;
• Availability of food stuff and beverage on payment of nominal tax for foreigners working in EPZ;
• Exemption of customs duties and sales tax on imported motor vehicles for executive of enterprises;
• One stop service to investors; and
• All customs formalities, within EPZs.
Additional Incentives for Small and Cottage Industries BSCIC registered units are exempt from payment of advanee income tax on import of their raw materials.
Foreign Investment Protection Act
The Foreign Private Investment (Promotion and Protection) Act, 1980 provides for fair and equitable treatment to foreign private investment. It ensures legal protection to foreign investment in Bangladesh against nationalization and expropriation. It also guarantees repatriation of capital and returns from it and equitable treatment with local investors with regard to indemnification compensation etc., in the event of loss due to civil commotion etc. Similarly, adequate protection is available for intellectual property rights, such as patents, designs, trade marks and copyrights.
Investment Treaties & Bilateral Agreements
Investment treaties for promotion and protection of investment between Bangladesh and the following countries have been concluded:
USA, Republic of Korea, UK, Thailand, Germany, Turkey, Romania, France, Belgium, Italy.
Negotiations are going on with a few other East Asian and European countries including the Netherlands and Switzerland.
Avoidance of Double Taxation - Bilateral Agreements
Bilateral agreements have been concluded by the Bangladesh government with the following countries for avoidance of double taxation:
Japan, Italy, Singapore, Sweden, Republic of Korea, United Kingdom (including Northern Ireland), Canada, Malaysia, Romania, Shri Lanka, France, Germany, Indian Pakistan.
Negotiations are going on for similar agreements with Belgium, the Netherlands and the USA.
Guarantees Through Multilateral Agencies
Bangladesh is a signatory of HIGA (Multilateral investment Guarantee Agency), OPIC (Overseas Private IHvestment Corporation) of America and ICSID (International Centre for Sgttlement of Investment Disputes). MIGA is the Multilateral Investment Guarantee Agency of the World Bank group to encourage the flow of foreign direct investment (FDI) to, and among, developing member countries by providi g guarantees to foreign investors against loss caused by non-commercial risks. MIGA's guarantee protects investors against losses arising from the risks of currency transfer, expropriation and war and civil disturbances. MIGA may only ensure new investment, privatization and financial restructuring.
OPIC is the most important US government agency which is in a position to promote greater investment interest in countries including Bangladesh by providing loan financing and investment insurance to American investors. OPIC also supports efforts by Bangladesh to attract increased foreign private investment. In order to secure its investment in Bangladesh any organization may seek OPIC insurance coverage.
The ICSID is an international organization established for the settlement of investment disputes between states and nationals of different states. ICSID seeks to encourage greater flows of international investment by providing facilities for the conciliation and arbitration of disputes between governments and foreign investors.
Abolition of Restrictions on Equity
Private investment from foreign sources is welcome in all areas except 5 reserved public sector investments. There is, however, no restriction on the amount of investment or equity shares. 100 percent foreign investment and joint ventures with local private partners or with the public sector are freely allowed.
Securities and Exchange Commission
To supervise the smooth functioning of securities and capital, the Securities and Exchange Commission (SEC) has been established recently (1993) through an Act of Parliament. It has the important responsibility to ensure proper issuance of securities. Protection of ue interest of the investors in the capital market is also a major objective of SEC. The Commission's main functions include the following:
• Regulating the business of stock exchange and the securities market;
• Registering and reg lating the business of stock-brokers, sub-brokers, share transfer agents, ban ers and managers of an issue, trustees of trust deeds, registrars to an issue, nderwriters, portfolio managers, investment advisers and other intermediaries in the securities market;
• Registering, regulati g and monitoring of collective investment schemes including all forms of utual funds;
• Prohibiting fraudulent and unfair trading practices related to securities or any securities market;
• Promoting investment education and training of all intermediaries of securities market;
• Prohibiting insider trading in securities;
• Regulating substantial acquisition of shares or stocks and take-overs of companies;
• Compiling, analyzing nd publishing indices on the financial performance of any issuer of securities; and
• Conducting research for the above purposes.
Tax Incentives and Facilities for Private Investment Tax Holiday
Tax holiday is allowed to industries subject to the relevant rules and procedures set by the National Board of Revenue (NBR). Presently, it is allowed for 5, 7, 9 and 12 years for industries set up in the developed, less developed, least developed and special economic zones respectively. The period of such tax holiday is calculated from the month of commencement of commercial production. The eligibility of tax holiday is to be determined by the NBR and the commencement of production is certified by the respective sponsoring agencies.
Accelerated Depreciation
Accelerated depreciation in lieu of tax holiday is allowed at the rate of 80 percent of actual cost of machinery or plant from the year the unit starts commercial production and 20 percent for the following year, if the industry is located in the developed area. If the unit is set up in a less developed area, the rate of depreciation is 100 percent.
Concessionary Duty Imported Capital Machinery
Import duty at the rate of 7.5 percent ad valorem is payable on capital machinery and spares imported for initial installation or for BMR/BMRE of existing industries. The value of spare parts should not, however, exceed 10 percent of the value of the machinery. Out of this 7.5 percent rate of duty payable. Export-oriented industries and industries located in the under-developed areas, may enjoy a further concession of the import duty in the following manner:
• For 100 percent export oriented Industries : No import duty or any other tax is payable.
• Export-oriented industries in developed areas : Effective rate of duty 5 percent (Industries exporting minimum 70 percent of the total annual production may submit a bank guarantee to the customs authority for 33.33 percent of the total import duty payable at the rate of 7.5 percent ad valorem. This bank guarantee will be returned after installation of the machinery and fulfilling the conditions of export. In this case effective rate of import duty payable is 5 percent ad valorem).
• Other industries In developed areas : Effective rate of duty 7.5 percent.
• Export oriented industries outside developed areas : Effective rate of duty 2.5 percent (Export- oriented industries, as mentioned above, located in under-developed areas may also submit a bank guarantee to the customs authority for 33.33 percent of the total import duty. In addition to this they may submit another bank guarantee for 33.33 percent of the total import duty payable at the rate of 7.5 percent ad valorem for being located in an under-developed area. These bank guarantees (33.33 percent plus 33.33 percent) will be returned after installation of the machinery and fulfilling the condition of export. In this case effective rate of import duty payable is 2.5 percent.
Other industries outside developed areas : Effective rate of duty 5 percent (all other industries located in under developed areas other than export.oriented, may submit a bank guarantee to the customs authority for 33.33 percent of the total import duty payable at the rate of 7.5 percent ad valorem. This bank guarantee will also be returned after installation of the machinery. In this case, the effective rate of import duty is 5 percent ad valorem).
Value Added Tax (VAT) is not payable for imported capital machinery and spares.
Tariff Rationalization
Products of local industries are protected through tariff rationalization, keeping in view the interest of entrepreneurs and consumers. Tariff protection is allowed upto 4 years to the new industries. There is Tariff Commission to prescribe protective rate where necessary.
Incentives to Non-Resident Bangladeshis
Special incentives are provided to encourage non-resident Bangladeshis for investment in industries. Non-resident Bangladeshi investors will enjoy facilities similar to those of foreign investors. Moreover, they can buy newly issued shares/debentures of Bangladeshi companies. Furthermore, they can maintain Non-resident Foreign Currency Deposit (NFCD) account for upto 5 years.
Rationalization of Import Duty
Duties and taxes on import of goods which are produced locally will be higher than those applicable to import of raw materials for producing such goods.
Other Incentives
• Exemption of tax on interest of foreign loans
• Exemption of tax on royalty, technical know-how and technical assistance fees, etc.,
• Liberal investment allo ance for tax assessment
• Import of machinery under supplier's credit or pay-as-you-earn (PAD) scheme on approved terms;
• Availability of long term credit facilities on liberal debt-equity ratio from industrial financing institutions (development finance institutions, nationalized commercial banks and rivate commercial banks)
• Income tax exemption of foreign technicians employed in approved industries for a period of 3 years
• Remittance of 50 percent of the salary of foreign nationals employed in approved industries;
• Remittance of savings from earnings, retirement benefits and personal assets of individuals on retirement/termination of services and
Value Added Tax
(i) VAT is imposed on goods and services at import stage, manufacturing, wholesale and retails levels;
(ii) A uniform VAT rate of 15 percent is applicable for both goods and services;
(iii) 15 percent VAT is applicable for all business or industrial units with an annual turnover of Taka 2 million and above;
(iv) Turnover tax at the rate of 4 percent is leviable where annual turnover is less than Taka 2 million;
(v) VAT is applicable to all domestic products and services with some exemptions;
(vi) VAT is payable at the time of supply of goods and services;
(vii) Tax paid on inputs is creditable/adjustable against output tax;
(viii) Export is exempt;
(ix) Cottage industries (defined as a unit with an annual turnover of less than Taka 2 million and with a capital machinery valued up to Taka 3,00,000) are exempt from VAT;
(x) Tax returns are to be submitted on monthly or quarterly or half yearly basis as notified by the Government.
(xi) Supplementary Duty (SD) is imposed at local and import stage under the VAT Act, 1991. Existing statutory SD rates are as follows:
(a) On goods: 20%, 35%, 65%, 100%, 250% & 350%
(b) On services: 10%, 15% & 35%.
Tax Base for VAT:
Import Stage: Customs Assessable Value + Customs duty + Supplementary Duty
Domestic/Local Stage: a) Goods (manufacturing): [Production cost + Profit and Commission (if any) + Supplementary duty (if any)]
b) Services: [total receipts excluding VAT but including supplementary duty (if any)]
Truncated Base / Fixed Value Addition: In some of the cases of goods and services producers and sellers face difficulties in availing VAT credit/adjustment facilities due to non availability of invoices from the sellers of input. In order to remove this operational difficulty fixed bases such as 10%, 25%, 30%, and 60% value addition is taken into account for calculation of VATfor a number of goods and services. In such circumstances net VAT ratefor different rates of value addition comes to 1.5%, 2.25%, 4.5% and 9%.
VAT at the wholesale and retail stage: In case of wholesalers and retailers, there is a special provision for a 1.5% percent VAT known as Trade VAT on the total sale, provided that the wholesaler/retailer do not avail the facility of input credit/adjustment. Such tax is also collected at the import stage from importers of finished goods as an advance trade VAT.
Tariff Value for imposition of VAT: Under the VAT Law, the government is empowered to fix Tariff Value for some items for the collection of VAT. Example: tariff value for mild-steel products produced from imported/locally procured re-rollable scraps is TK 4000.00 per MT. Normal VAT input credit is also not available under this system.
Deduction of VAT at source: As deduction at source is also practiced in case of VAT on certain services, Government, Semi-Government, Autonomous Bodies, NGOs, Banks, Insurance Companies and Limited Companies are authorized by the government to deduct applicable VAT on the services at source.
Excise Duty: At present excise dutyapplies to only two items: bank depositsand domestic air ticket (Tk. 250 per journey).
Customs
Customs wing is primarily responsible for collection of all duties and taxes at the import stage. Apart from collection of government revenue it is also responsible for trade facilitation, enforcement of government regulations, protection of society and environmental protection, preparation of foreign trade statistics, trade compliance and protection of cultural heritage.
Customs collects 42% of the NBR’s total revenue. The revenue target for the year 2007-08 was Tk. 17,812 Cr. and actual revenue collection so far (July’ 07 to May’08) is Tk. 16, 987.06 Cr. that is 19.04% higher than the previous year. The target has been revised to Tk. 19385 Cr. for 2007-08 and with an increase of 16.25%; it has been set to Tk. 22,536 Cr. for the year 2008-09.
In the present financial year (2007-08) there are 3 duty slabs of customs duties i.e. 10% for basic raw material, 15% for intermediate raw material or semi finished products, and 25% for finished products. In the proposed 2008-09 budget, the duty structure has been restructured and a four tier duty structure has been proposed, i.e. 3% for capital machinery, 7% for basic raw material, 12% for intermediate raw-material or semi finished products, and 25% for finished products.
Since Customs functions at the gateway for import and export of goods, it plays a critical role in the import-export trade chain. In order to make customs procedures more transparent and to achieve more trade facilitation, a number of measures have been taken in past few years. With the introduction of ASYCUDA++ and Direct Traders Input (DTI) automation in customs clearance has begun. Recently, a full automation scheme is on way of implementation in collaboration with the Chittagong Chamber and the Task Force. Once the full automation is completed the importers and exporters will be able to access customs server from their offices or homes and will be able to submit their customs declaration online.
Exemptions from Customs Duty:
i) Capital machinery; ii) Raw materials of Medicine; iii) Poultry Medicine, Feed & machinery; iv) Defence stores;
v) Chemicals of leather and leather goods; vi) Private power generation unit; vii) Textile raw materials and machinery; viii) Solar power equipment; ix) Relief goods;
x) Goods for blind and physically retarded people; and xi) Import by Embassy and UN.
http://www.asiatradehub.com/bangladesh/tax.asp
1.Bangladesh Finance Minister http://www.mof.gov.bd/en/index.php?option=com_content&view=article&id=107&Itemid=1 2. Bangladesh Bureau of statistics http://www.bbs.gov.bd/ 3.Bangladesh Bank
4.Income Tax Ordinance 1984 http://bdlaws.gov.bd/pdf_part.php?id=672 Bangladesh-Taxes
VAT act 1991: http://www.sai.uni-heidelberg.de/workgroups/bdlaw/1991-a22.htm TAX SYSTEM OF BANGLADESH
Major heads of tax-revenues of Bangladesh are as follows:
A. Taxes on Income and Profit
1. Income tax-Companies
2. Income tax-Other than Companies
B. Taxes on Property & Capital Transfer
1. Estate Duty and Gift Tax
2. Wealth Tax
3. Narcotics Duty
4. Land Revenue
5. Stamp duty-non-judicial
6. Registration
C. Taxes on goods and services
1. Customs Duties
2. Excise Duties
3. Value Added Tax (VAT)
4. Supplementary Duty (On luxury items and in addition to VAT)
5. Taxes on Vehicles
6. Electricity Duties
7. Other Taxes and Duties (travel tax, turn over tax, etc.)
.
An Introduction to Income Tax in Bangladesh
Tax implications in each country are an important consideration for an investor. Here is an overview of taxation in Bangladesh
Among direct taxes, income tax is one of the main sources of revenue. It is a progressive tax system. Income tax is imposed on the basis of ability to pay. The more a taxpayer earns the more he should pay''- is the basic principle of charging income tax. It aims at ensuring equity and social justice.
The income tax of Bangladesh is administrated Income Tax Ordinance, 1984 and the Income tax Rules, 1984 as well as notification made under the Ordinance. The charge of tax of a person depends on its resident ship. Total world Income of a resident is charged to tax in Bangladesh. Where as a non-resident's Bangladesh income is only charged to tax in Bangladesh. There are seven heads of income. There are salary, interest on security, house property, agriculture, business and profession, capital gain and other sources. The Submission of income tax returns is generally due by 30th September in case of non-companies and by 31st December in case of companies. Assessment is made in several procedures. They are self assessment, presumptive assessment, spot assessment, pre-audit based assessment. Certain percent of self assessment cases are selected for audit. The assessee can prefer appeal if aggrieved by his assessment. There are three primary forums for appeal. They are to the Appellate Commissioner/Additional Commissioner/Joint Commissioner or to the Commission for reviews. The decisions of Appellate Commissioner/Additional Commissioner/Joint Commissioner can be challenged to the next Appellate Court named as Appellate Tribunal. Withholding tax is leviable on a number of items including contractors, imports, transfer of urban land/building, bank deposits etc. Bangladesh has Agreement on Avoidance of Double Taxation with 20 countries. Negotiation with some other countries are on way.
Income Tax Authorities:
Under the income tax ordinance 1984 the following authorities are responsible for collecting the income taxes and exercise the power of authority:
• National Board of Revenue,
• Director General of Inspection (Tax),
• Commissioner of Taxes (Appeals),
• Commissioner of Taxes (Large Taxpayer Unit)
• 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.
Sources of Income:
For the purpose of computation of total income and charging tax thereon, sources of income can be classified into 7 categories, which are as follows:
• Salaries
• Interest on securities
• Income from house property
• Income from agriculture
• Income from business or profession
• Capital gains
• Income from other sources.
Computation of Total Income:
43. (1) For the purpose of charge of tax, the total income of an assessee shall be computed in the manner provided in this ordinance.
(2) In computing the total income of an assessee, there shall be included any exemption or allowance specified in part B of the Sixth Schedule and any income deemed to be the income of the assessee under section 19, subject to the limits, conditions and qualifications laid down therein.
(3) Where the assessee is a partner of a firm, then, whether the firm has made a profit or a loss, his share (whether a net profit or a net loss) shall be taken to be any salary, interest, commission or other remuneration payable to him by the firm in respect of the income year increased or decreased respectively by his share in the balance of the profit or loss of the firm after the deduction of any interest, salary, commission or other remuneration payable to any partner in respect of the income year [* * *] and such share shall be included in his total income:
Provided that if his share so computed is a loss, such loss may be set off or carried forward and set off in accordance with the provisions of section 42.
(4) In computing the total income of any individual for the purpose of assessment, there shall be included-
(a) so much of the income of the spouse or minor child of such individual as arises, directly or indirectly,-
(i) from the membership of the spouse in a firm of which such individual is a partner;
(ii) from the admission of the minor child to the benefits of partnership in a firm of which such individual is a partner;
(iii) from assets transferred directly or indirectly to the spouse [otherwise than by way of gift or for adequate consideration] or in connection with an agreement to live apart; or
(iv) from assets transferred directly or indirectly to the minor child, not being a married daughter, by such individual [otherwise than by way of gift or for adequate consideration]; and
(b) so much of the income of any person or association of persons as arises from assets transferred, [otherwise than by way of gift or for adequate consideration], to such person or association or persons by such individual for the benefit of the spouse or minor child or both.
(5) All income arising to any person by virtue of a settlement or disposition whether revocable or not from assets remaining the property of the [settlor] or disponer, shall be deemed to be income of the [settlor] or disponer, and all income arising to any person by virtue of a revocable transfer of assets shall be deemed to be income of the transferor and shall be included in the total income of such person [.
[* * *]]
(6) For the purpose of sub-section (5),-
(a) a settlement, disposition or transfer shall be deemed to be revocable if it contains any provision for the retransfer directly or indirectly of the income or assets to the [settlor], disponer or transferor, or in any way gives the [settlor], disponer or transferor a right to resume power directly over the income or assets;
(b) the expression “settlement or disposition” shall include any disposition, trust, covenant, agreement or arrangement, and the expression [settlor] or disponer, in relation to a settlement or disposition, shall include any person by whom the settlement or disposition was made.
Tax Rate (Assessment Year- 2008-09) :
For Individual Taxpayers (Other than Company):
If an individual has been in Bangladesh for a period/period totaling 182 days or more in the income year, he/she is considered a resident. In case an individual has been in the country for 90 days in the income year and 365 days in four years preceding this year, he/she will also be considered a resident.
For individuals other than female taxpayers, senior taxpayers of 70 years and above and retarded taxpayers, tax payable for the
First 1,65,000/- ($2,375) Nil
Next 2,75,000/- ($3,957) 10%
Next 3,25,000/- ($4,676) 15%
Next 3,75,000/- ($5,395) 20%
Rest Amount 25%
For female taxpayers, senior taxpayers of age 70 years and above and retarded taxpayers, tax payable for the
First 1,80,000/- Nil
Next 2,75,000/- 10%
Next 3,25,000/- 15%
Next 3,75,000/- 20%
Rest Amount 25%
Minimum tax for any individual assessee is Tk. 2,000(About $29)
Non-resident Individual 25%
(other than non-resident Bangladeshi)
For Companies
Any income collected or gained by a company doing business in Bangladesh, whether resident or not is taxable
Publicly Traded Company 27.5%
Non-publicly Traded Company 37.5%
Bank, Insurance & Financial Company 45%
Mobile Phone Operator Company 45%
If any publicly traded company declares more than 20% dividend, 10% rebate on total tax is allowed. Tax Rebate for investment: Rate of Rebate: Amount of allowable investment is either up to 25% of total income or Tk. 5, 00,000/- ($7,195) - 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
• 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
Who should submit Income Tax Return?
• If total income of any individual other than female taxpayers, senior taxpayers of 70 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 70 years and above and retarded taxpayer during the income year exceeds Tk 1,80,000/-.
• 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 storey 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.
• 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.
Time to Submit Income Tax Return:
For Company
By fifteenth day of July next following the income year or, where the fifteenth day of July falls before the expiry of six months from the end of the income year, before the expiry of such six months. For Other than Company
Unless the date is extended, by the Thirtieth day of September next following the income year.
Consequences of Non-Submission of Return
• imposition of penalty amounting to 10% of tax on last assessed income subject to a minimum of Tk. 1,000/-
• In case of a continuing default a further penalty of Tk. 50/- for every day of delay. Assessment Procedures :
• For a return submitted under normal scheme, assessment is made after hearing.
• For returns submitted under Universal Self Assessment Scheme, the acknowledgement 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.
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.
Heads of Income Subject to deduction or collection of income tax at source with specified rates of deduction. No. Heads Section/Rule Rate Chalan in the name of
1 Salaries Section 50 deduction at average rate Respective Zone
2 Discount on the real value of Bangladesh Bank Bills Section 50A deduction at normal rate or maximum rate whichever is greater. LTU
3 Interest on securities Section 51 10%on interest or discount LTU 4 Supply of goods and execution of contracts and sub-contracts Section 52(Rule 16) nil up to 1 lac, 1-5 lacs (1%), 5-15 lacs (2.5%), 15-25 lacs 3.5% and 25 lacs and above (4%) Zone-2 (Partly) & LTU
5 Indenting commission /
Shipping agency commission Section 52 (Rule 17) 3.5% of the total receipt of indenting commission & 5% of total Shipping agency commission receipt Zone-2
6 Royalty, Fees for professional or technical services Section 52 A 10% of the fees Zone-8
7 Stevedoring agency & Security service Section 52 AA 7.5% of the fees Ctg. Zone-2
8 C & F agency commission Section 52 AAA 7.5% of the fees Zone-2
9 Sale of bandrolls ( for biri) Section 52B 6% of the value of bandrolls. Respective Zone
10 Compensation for acquisition of property Section 52C 6% of the compensation money Zone-2
11 Interest on saving instruments Section 52D 10% of the amount of interest (Current rate) Zone-2
12 Collection of tax from brick manufacturers Section 52F 1 Sec. = Tk.10,000/ for each brick field.
1.5 Sec. = Tk.12,000/ for each brick field.
2 Sec. = Tk.18,000/ for each brick field. Respective Zone
13 Commission on Letter of Credits Section 52I 5% of the amount of commission. LTU
14 Issuing & Renewal of trade licence Section 52K Tk 500/- For renewal of each Lincence Zone-3
15 Trustee fees Section 52L 10%
16 Frieght Forward agency Com. Section 52M 7.5%
17 Rental power Section 52N 4%
18 Import of goods Section 53 (Rule17A) 3% of the value of imports. Zone-2
19 Income from house property (house rent) Section 53A (Rule17B) No deduction if monthly rent is below 20,000/-
3% (if monthly rent is 20,000-40,000 Tk.) and
5% (if monthly rent is above 40,000 Tk.) Zone-2 Dha & Other outside Zone
20 Shipping business of resident Section 53AA 5% of freight Zone-2,ctg
21 Export of manpower Section 53B (Rule 17C) 10% of the service charges. Zone-2, dhk & ctg
22 Export of Knitwear Section 53BB 0.25% Zone-5
23 Member of Stock Exchange Section 53BBB 0.015% Zone-7
24 Export of goods except Knitweare & Woven garments Section 53BBBB 0.25% Zone-5
25 Sale of goods by public auction Section 53C (Rule 17D) 5% of the sale price Zone-2
26 Courier Service (Non-resident) Section 53CC 7.5% Zone-6
27 Payment to film actors and actresses Section 53D (Rule 17E) 5% of the amount paid exceeding
Tk. 36000/- Zone-2
28 Cash subsidy Section 53DD 5% Zone-5
29 Commission Fees or discount paid to distributors Section 53E (Rule 17G) 7.5% of the amount of commission. Zone-2 & LTU
30 Commission or charges paid to the agents of foreign buyers Section 53EE 4 % on the amount of commission or charges. Dhk.Zone-6, Ctg.Zone-3 and Zone of Respective Division
31 Interest on bank deposits Section 53F (Rule 17H) 10% of the amount of interest. Zone-1
32 Real Estate & Developers Section 53FF In case of Bldg. 250 per sq. meter
In case of land 5% of deed value Zone-5
33 Insurance commission Section 53G 3% on the amount of commission LTU
34 Commission paid to the Surveyors of General Insurances Section 53GG 7.5% on the amount of commission. Dhk.Zone-2, Ctg.Zone-3 and Zone of Respective Division
35 Transfer of property Section 53H (Rule 17I) 5% of the value of the property. Survey Zone Interest on Post Office Savings Bank Account Section 53I No deduction if the amount of interest does not exceeds Tk.1,50,000 and if exceeds then 10% on the amount of interest . Zone-2
36 Rent of vacant land, plant and machinery Section 53J (Rule 17BB) No deduction if monthly rent is below 15,000/-
3% (if monthly rent is 15,000 -30,000 Tk.) and
5% (if monthly rent is above 30,000 Tk.) Zone-2 37 Advertising bill of news paper, magazine, private television channel Section 53K 3% of the value of the property. Zone-5
38 Dividend Section 54 (1) Resident individual 10%, non-resident individual 25% (2) Company 15% LTU (only LTU’s files) all others Zone-2
39 Income from lottery Section 55 20% of the amount won. Zone-2
40 Income of non-resident Other than non-resident Bangladeshi} Section 56 Compny - rate applicable to the com. Other than company - maximum rate. Zone-6 Major areas for final settlement of tax liability :
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 Recovery System :
In case of non-payment of income tax demand the following measures can be taken against a taxpayer for realization of tax:-
• Imposition of penalty
• Attachment of bank accounts, salary or any other payment.
• Filing of Certificate case to the Special Magistrate.
Advance Payment of Tax :
Every taxpayer is required to pay advance tax in four equal installments falling on 15th September; 15th December; 15th March and 15th June of each year if the latest assessed income exceeds Taka three lakh. Penalty is imposed for default in payment of any installment of advance tax.
Fiscal incentives :
Following are fiscal incentives available to a taxpayer:-
a) Tax holiday : Tax holiday is allowed for industrial undertaking, tourist industry and physical infrastructure facility established between 1st July 2008 to 30th June 2011 in fulfillment of certain conditions. Industrial Undertaking Eligible for Tax holiday : (i) An industry engaged in production of textile, textile machinery, jute goods, high value garments, pharmaceuticals, melamine, plastic products, ceramics, sanitary ware, steel from iron ore, MS Rod, CI Sheet, fertilizer, insecticide & pesticide, computer hardware, petro-chemicals, agriculture machinery, boilers, compressors, basic raw materials of drugs, chemicals and pharmaceuticals. (ii) An industry engaged in agro-processing, ship building, diamond cutting. Physical Infrastructure Eligible for Tax holiday: Sea or river port, container terminals, internal container depot, container freight station, LNG terminal and transmission line, CNG terminal and transmission line, gas pipe line, flyover, mono rail, underground rail, telecommunication other than mobile phone, large water treatment plant & supply through pipe line, waste treatment plant, solar energy plant, export processing zone. Tourism Industry Eligible for Tax holiday : Residential hotel having facility of three star or more.
b) Accelerated depreciation: Accelerated depreciation on cost of machinery is admissible for new industrial undertaking in the first year of commercial production 50%, in the second year 30% and in the third year 20%.
c) Income derived from any Small and Medium Enterprise (SME) engaged in production of any goods and having an annual turnover of not more than taka twenty four lakh is exempt from tax.
d) Industry set up in EPZ is exempt from tax for a period of 10 years from the date of commencement of commercial production.
e) Income from fishery, poultry, cattle breeding, dairy farming, horticulture, floriculture, mushroom cultivation and sericulture are exempt from tax up to 30th June, 2011, subject to investing at least 10% of the exempted income that exceeds one lakh Taka, in government bonds.
f) Income derived from export of handicrafts is exempted from tax up to 30th June, 2011.
g) An amount equal to 50% of the income derived from export business is exempted from tax.
h) Listed companies are entitled to 10% tax rebate if they declare dividend of 20% or more.
i) Income from Information Technology Enabled Services (ITES) business is exempted up to 30th June, 2011.
Avoidance of Double Taxation Agreement :
There are agreements on avoidance of double taxation between Bangladesh and 28 countries which are:-
(1) United Kingdom of Great Britain and Northern Ireland, (2) Singapore (3) Sweden (4) Republic of Korea 5) Canada (6) Pakistan (7) Romania (8) Sri Lanka (9) France (10) Malaysia (11) Japan (12) India (13) Germany (14) The Netherlands (15) Italy (16) Denmark (17) China (18) Belgium (19) Thailand (20) Poland (21) Philippines (22) Vietnam (23) Turkey (24) Norway (25) USA (25) Indonesia (27) Switzerland (28) Oman
• How is the period for assessment determined?
• Income tax is levied on all companies and individuals for the previous year and payable for the year of assessment of fiscal year (July to June). If a company adopts an accounting period different from the fiscal year, the business period is a 12 month accounting period preceding the year of assessment. Taxable income is calculated after adjusting for incurred expenses in the production of income.
• Returns filed received by or due to foreign technician under contract if it is accompanied by audited accounts and certified by a chartered accountant as to the correctness of the total income of the assessee.
• Salary income received by or due to a foreign technician under contract of service approved by the NBR is fully exempted from paying tax (subject to prescribed conditions and limitations) for a period of three years from the date of his arrival in Bangladesh.
• Expenditure incurred by an employer in respect of remuneration of a foreign technician is also fully exempted from income tax (subject to stipulated conditions).
• Expenditure incurred as a remuneration payable to a foreign technician by a Bangladeshi firm carrying on the business of consultant and engineers in Bangladesh is fully exempted from tax (subject to prescribed conditions and limitations
Who is entitled to a Tax Holiday?
Tax holiday is allowed to industries subject to the relevant rules and procedures set by the National Board of Revenue (NBR) for the following period according to the location of the establishment.
In Dhaka and chittagong Divisions (excluding 3 hill districts): 5 years. In other divisions (including 3 hill districts of chittagong Division): 7 years.
The period of such tax holiday will be calculated from the month of commencement of commercial production. The eligibility of tax holiday to be determined by the NBR and the time of the commencement of commercial production is certified by the respective sponsoring agencies. The industrial establishment should be registered under the companies Act. 1994.
Tax holiday facility can be availed by industries coming into commercial production within 30 June 2000 A.D.
What are the other tax incentives in Bangladesh?
Other tax incentives: Exemption of tax on interest of foreign loan. Exemption of tax on Royalty/Technical know-how. Tax exemption on capital gains. Avoidance of double taxation. Liberal investment allowance for tax assessment.
An accelerated depreciation instead of a tax holiday of a tax holiday is allowed at the rate of 80 per cent of the actual cost of the machinery or plant from the year the plant starts production and 20 per cent for the following year provided the industry is located within a "developed area". the depreciation is 10 per cent if the industry is set up in a location considered less than a "developed area".
Accepted of returns of public limited companies:
Returns filed by the public limited companies shall be accepted as correct if it is accompanied by audited accounts and certified by a chartered accountant as to the correctness of the total income of the assessee
Salary of foreign technicians:
Salary income received by or due to a foreign technician under contract of service approved by the National Board of Revenue is fully exempted from paying tax (subject to prescribed conditions and limitations) for a period of three years from the date of his arrival in Bangladesh
Tax payable by employer on remuneration of foreign technician:
Expenditure incurred by an employer in respect of remuneration of a foreign technician is also fully exempted from income tax (subject to the stipulated conditions)
Remuneration of foreign technicians employed by the firms of consultancy and engineers:
Expenditure incurred as remuneration payable to a foreign technicians by a Bangladeshi firm carrying on the business of consultant and engineers in Bangladesh is fully exempted from tax (subject to prescribed conditions and limitations)
Facilities and Tax Incentives for Foreign Investors
General Incentives
Foreign investors are entitled to the following:
• Tax exemption on capital gains from the transfer of shares by the investing company;
• Avoidance of double taxation in case of foreign investors on the basis of bilateral agreements
• No restriction in issuing work permits to foreign nationals in Bangladesh
• Facilities for repatriation of invested capital, profits and dividends
• Provision for transfer of shares held by foreign shareholders to the local shareholders/investor with the permission of the BOI and the Exchange Control Department of the Bangladesh Bank
• Treatment of repatriable dividends as new foreign investment
• Allowing long term loan and working capital loan to foreign investors from local commercial banks ; and
• Permanent residentship to a foreign citizen investing a minimum of US$ 75,000 or equivalent amount (non.repatriable) ; similarly citi~hip to any foreign citizen investing US$ ~,000 or transferring US$ 1,000,000 to any recognized Bangladeshi financing institution (nonrepatriable).
Additional Incentives for Export Oriented/Linkage Industries
Encouraging export oriented industries is one of the major objectives of the Industrial Policy, 1991 and as such government ensures all support and co-operation on priority basis as per export policy. Some of the facilities and incentives offered are as follows:
• Concessionary duty is allowed on the import of capital machinery and spare parts for setting up export oriented industries or BMRE of existing industries. For 100 percent export oriented industries no import duty is payable;
• Facilities such as special bonded warehouse against back-to-back letter of credit or national import duty and payment of value added tax (VAT) facilities are available;
• The system of duty drawback is being simplified and streamlined. Back loan upto percent of the value against irrevocable and confirmed letters of credit/sales agreements available;
• With a view to ensuring backward linkages, export oriented industries including export oriented readymade garment industries using indigenous raw materials instead of imported ones, are given additional facilities and benefits at prescribed rates. Similar incentives are extended to the suppliers of raw materials to export oriented industries;
• The expert oriented industries are allocated foreign exchange for publicity campaigns and for opening offices abroad;
• The entire export earning from handicrafts and cottage industries is exempt from income tax. In case of all other industries, proportional income tax rebate on export earnings is given between 30 and 100 percent. Those industries which export 100 percent of their products are given tax exemption upto 100 percent;
• For manufacturing exportable commodities, import of raw materials under the Control List is allowed;
• The import of specified quantities of duty free samples for manufacturing exportable products is allowed. The quantity and value of samples an determined jointly by the concerned sponsoring agency and the National Board of Revenue;
• The local products supplied to local projects against Foreign exchange international tender are treated as indirect exports and the producer is entitled to all export facilities;
• Export oriented industries producing toys, luggage and fashion articles, electronic goods, leather goods, diamond cutting and polishing, jewellery, stationery goods, silk cloth, gift items, cut and artificial flowers and orchid vegetable processing and engineering consultaney Aces are 3dentiiied by the government thrust sectors and provided with special facilities through cash incentives, venture capital and other facilities; and
• Export-oriented industries are exempt from paying local taxes such as municipal tax.
Remittance Facilities
Remittance of profits of branches of foreign firms/companies, dividends/capital gains, salaries and savings by expatriates, royalty and technical fees, training and consultancy fees, receivables collected by shipping companies and an lines towards freight and passage can be effected through authorized dealers without prior approval of the Bangladesh bank.
Additional Incentives for EPZ Industries
In addition to the incentives and facilities available to industries in general, the industries in the Export Processing Zones are allowed to enjoy the following facilities:
• Freedom from National Import Policy restrictions;
• offshore banking facilities;
• Relocation of existing industries from abroad;
• Back to back letter of credit facility for certain types of industries for import of raw materials;
• Availability of food stuff and beverage on payment of nominal tax for foreigners working in EPZ;
• Exemption of customs duties and sales tax on imported motor vehicles for executive of enterprises;
• One stop service to investors; and
• All customs formalities, within EPZs.
Additional Incentives for Small and Cottage Industries BSCIC registered units are exempt from payment of advanee income tax on import of their raw materials.
Foreign Investment Protection Act
The Foreign Private Investment (Promotion and Protection) Act, 1980 provides for fair and equitable treatment to foreign private investment. It ensures legal protection to foreign investment in Bangladesh against nationalization and expropriation. It also guarantees repatriation of capital and returns from it and equitable treatment with local investors with regard to indemnification compensation etc., in the event of loss due to civil commotion etc. Similarly, adequate protection is available for intellectual property rights, such as patents, designs, trade marks and copyrights.
Investment Treaties & Bilateral Agreements
Investment treaties for promotion and protection of investment between Bangladesh and the following countries have been concluded:
USA, Republic of Korea, UK, Thailand, Germany, Turkey, Romania, France, Belgium, Italy.
Negotiations are going on with a few other East Asian and European countries including the Netherlands and Switzerland.
Avoidance of Double Taxation - Bilateral Agreements
Bilateral agreements have been concluded by the Bangladesh government with the following countries for avoidance of double taxation:
Japan, Italy, Singapore, Sweden, Republic of Korea, United Kingdom (including Northern Ireland), Canada, Malaysia, Romania, Shri Lanka, France, Germany, Indian Pakistan.
Negotiations are going on for similar agreements with Belgium, the Netherlands and the USA.
Guarantees Through Multilateral Agencies
Bangladesh is a signatory of HIGA (Multilateral investment Guarantee Agency), OPIC (Overseas Private IHvestment Corporation) of America and ICSID (International Centre for Sgttlement of Investment Disputes). MIGA is the Multilateral Investment Guarantee Agency of the World Bank group to encourage the flow of foreign direct investment (FDI) to, and among, developing member countries by providi g guarantees to foreign investors against loss caused by non-commercial risks. MIGA's guarantee protects investors against losses arising from the risks of currency transfer, expropriation and war and civil disturbances. MIGA may only ensure new investment, privatization and financial restructuring.
OPIC is the most important US government agency which is in a position to promote greater investment interest in countries including Bangladesh by providing loan financing and investment insurance to American investors. OPIC also supports efforts by Bangladesh to attract increased foreign private investment. In order to secure its investment in Bangladesh any organization may seek OPIC insurance coverage.
The ICSID is an international organization established for the settlement of investment disputes between states and nationals of different states. ICSID seeks to encourage greater flows of international investment by providing facilities for the conciliation and arbitration of disputes between governments and foreign investors.
Abolition of Restrictions on Equity
Private investment from foreign sources is welcome in all areas except 5 reserved public sector investments. There is, however, no restriction on the amount of investment or equity shares. 100 percent foreign investment and joint ventures with local private partners or with the public sector are freely allowed.
Securities and Exchange Commission
To supervise the smooth functioning of securities and capital, the Securities and Exchange Commission (SEC) has been established recently (1993) through an Act of Parliament. It has the important responsibility to ensure proper issuance of securities. Protection of ue interest of the investors in the capital market is also a major objective of SEC. The Commission's main functions include the following:
• Regulating the business of stock exchange and the securities market;
• Registering and reg lating the business of stock-brokers, sub-brokers, share transfer agents, ban ers and managers of an issue, trustees of trust deeds, registrars to an issue, nderwriters, portfolio managers, investment advisers and other intermediaries in the securities market;
• Registering, regulati g and monitoring of collective investment schemes including all forms of utual funds;
• Prohibiting fraudulent and unfair trading practices related to securities or any securities market;
• Promoting investment education and training of all intermediaries of securities market;
• Prohibiting insider trading in securities;
• Regulating substantial acquisition of shares or stocks and take-overs of companies;
• Compiling, analyzing nd publishing indices on the financial performance of any issuer of securities; and
• Conducting research for the above purposes.
Tax Incentives and Facilities for Private Investment Tax Holiday
Tax holiday is allowed to industries subject to the relevant rules and procedures set by the National Board of Revenue (NBR). Presently, it is allowed for 5, 7, 9 and 12 years for industries set up in the developed, less developed, least developed and special economic zones respectively. The period of such tax holiday is calculated from the month of commencement of commercial production. The eligibility of tax holiday is to be determined by the NBR and the commencement of production is certified by the respective sponsoring agencies.
Accelerated Depreciation
Accelerated depreciation in lieu of tax holiday is allowed at the rate of 80 percent of actual cost of machinery or plant from the year the unit starts commercial production and 20 percent for the following year, if the industry is located in the developed area. If the unit is set up in a less developed area, the rate of depreciation is 100 percent.
Concessionary Duty Imported Capital Machinery
Import duty at the rate of 7.5 percent ad valorem is payable on capital machinery and spares imported for initial installation or for BMR/BMRE of existing industries. The value of spare parts should not, however, exceed 10 percent of the value of the machinery. Out of this 7.5 percent rate of duty payable. Export-oriented industries and industries located in the under-developed areas, may enjoy a further concession of the import duty in the following manner:
• For 100 percent export oriented Industries : No import duty or any other tax is payable.
• Export-oriented industries in developed areas : Effective rate of duty 5 percent (Industries exporting minimum 70 percent of the total annual production may submit a bank guarantee to the customs authority for 33.33 percent of the total import duty payable at the rate of 7.5 percent ad valorem. This bank guarantee will be returned after installation of the machinery and fulfilling the conditions of export. In this case effective rate of import duty payable is 5 percent ad valorem).
• Other industries In developed areas : Effective rate of duty 7.5 percent.
• Export oriented industries outside developed areas : Effective rate of duty 2.5 percent (Export- oriented industries, as mentioned above, located in under-developed areas may also submit a bank guarantee to the customs authority for 33.33 percent of the total import duty. In addition to this they may submit another bank guarantee for 33.33 percent of the total import duty payable at the rate of 7.5 percent ad valorem for being located in an under-developed area. These bank guarantees (33.33 percent plus 33.33 percent) will be returned after installation of the machinery and fulfilling the condition of export. In this case effective rate of import duty payable is 2.5 percent.
Other industries outside developed areas : Effective rate of duty 5 percent (all other industries located in under developed areas other than export.oriented, may submit a bank guarantee to the customs authority for 33.33 percent of the total import duty payable at the rate of 7.5 percent ad valorem. This bank guarantee will also be returned after installation of the machinery. In this case, the effective rate of import duty is 5 percent ad valorem).
Value Added Tax (VAT) is not payable for imported capital machinery and spares.
Tariff Rationalization
Products of local industries are protected through tariff rationalization, keeping in view the interest of entrepreneurs and consumers. Tariff protection is allowed upto 4 years to the new industries. There is Tariff Commission to prescribe protective rate where necessary.
Incentives to Non-Resident Bangladeshis
Special incentives are provided to encourage non-resident Bangladeshis for investment in industries. Non-resident Bangladeshi investors will enjoy facilities similar to those of foreign investors. Moreover, they can buy newly issued shares/debentures of Bangladeshi companies. Furthermore, they can maintain Non-resident Foreign Currency Deposit (NFCD) account for upto 5 years.
Rationalization of Import Duty
Duties and taxes on import of goods which are produced locally will be higher than those applicable to import of raw materials for producing such goods.
Other Incentives
• Exemption of tax on interest of foreign loans
• Exemption of tax on royalty, technical know-how and technical assistance fees, etc.,
• Liberal investment allo ance for tax assessment
• Import of machinery under supplier's credit or pay-as-you-earn (PAD) scheme on approved terms;
• Availability of long term credit facilities on liberal debt-equity ratio from industrial financing institutions (development finance institutions, nationalized commercial banks and rivate commercial banks)
• Income tax exemption of foreign technicians employed in approved industries for a period of 3 years
• Remittance of 50 percent of the salary of foreign nationals employed in approved industries;
• Remittance of savings from earnings, retirement benefits and personal assets of individuals on retirement/termination of services and
Value Added Tax
(i) VAT is imposed on goods and services at import stage, manufacturing, wholesale and retails levels;
(ii) A uniform VAT rate of 15 percent is applicable for both goods and services;
(iii) 15 percent VAT is applicable for all business or industrial units with an annual turnover of Taka 2 million and above;
(iv) Turnover tax at the rate of 4 percent is leviable where annual turnover is less than Taka 2 million;
(v) VAT is applicable to all domestic products and services with some exemptions;
(vi) VAT is payable at the time of supply of goods and services;
(vii) Tax paid on inputs is creditable/adjustable against output tax;
(viii) Export is exempt;
(ix) Cottage industries (defined as a unit with an annual turnover of less than Taka 2 million and with a capital machinery valued up to Taka 3,00,000) are exempt from VAT;
(x) Tax returns are to be submitted on monthly or quarterly or half yearly basis as notified by the Government.
(xi) Supplementary Duty (SD) is imposed at local and import stage under the VAT Act, 1991. Existing statutory SD rates are as follows:
(a) On goods: 20%, 35%, 65%, 100%, 250% & 350%
(b) On services: 10%, 15% & 35%.
Tax Base for VAT:
Import Stage: Customs Assessable Value + Customs duty + Supplementary Duty
Domestic/Local Stage: a) Goods (manufacturing): [Production cost + Profit and Commission (if any) + Supplementary duty (if any)]
b) Services: [total receipts excluding VAT but including supplementary duty (if any)]
Truncated Base / Fixed Value Addition: In some of the cases of goods and services producers and sellers face difficulties in availing VAT credit/adjustment facilities due to non availability of invoices from the sellers of input. In order to remove this operational difficulty fixed bases such as 10%, 25%, 30%, and 60% value addition is taken into account for calculation of VATfor a number of goods and services. In such circumstances net VAT ratefor different rates of value addition comes to 1.5%, 2.25%, 4.5% and 9%.
VAT at the wholesale and retail stage: In case of wholesalers and retailers, there is a special provision for a 1.5% percent VAT known as Trade VAT on the total sale, provided that the wholesaler/retailer do not avail the facility of input credit/adjustment. Such tax is also collected at the import stage from importers of finished goods as an advance trade VAT.
Tariff Value for imposition of VAT: Under the VAT Law, the government is empowered to fix Tariff Value for some items for the collection of VAT. Example: tariff value for mild-steel products produced from imported/locally procured re-rollable scraps is TK 4000.00 per MT. Normal VAT input credit is also not available under this system.
Deduction of VAT at source: As deduction at source is also practiced in case of VAT on certain services, Government, Semi-Government, Autonomous Bodies, NGOs, Banks, Insurance Companies and Limited Companies are authorized by the government to deduct applicable VAT on the services at source.
Excise Duty: At present excise dutyapplies to only two items: bank depositsand domestic air ticket (Tk. 250 per journey).
Customs
Customs wing is primarily responsible for collection of all duties and taxes at the import stage. Apart from collection of government revenue it is also responsible for trade facilitation, enforcement of government regulations, protection of society and environmental protection, preparation of foreign trade statistics, trade compliance and protection of cultural heritage.
Customs collects 42% of the NBR’s total revenue. The revenue target for the year 2007-08 was Tk. 17,812 Cr. and actual revenue collection so far (July’ 07 to May’08) is Tk. 16, 987.06 Cr. that is 19.04% higher than the previous year. The target has been revised to Tk. 19385 Cr. for 2007-08 and with an increase of 16.25%; it has been set to Tk. 22,536 Cr. for the year 2008-09.
In the present financial year (2007-08) there are 3 duty slabs of customs duties i.e. 10% for basic raw material, 15% for intermediate raw material or semi finished products, and 25% for finished products. In the proposed 2008-09 budget, the duty structure has been restructured and a four tier duty structure has been proposed, i.e. 3% for capital machinery, 7% for basic raw material, 12% for intermediate raw-material or semi finished products, and 25% for finished products.
Since Customs functions at the gateway for import and export of goods, it plays a critical role in the import-export trade chain. In order to make customs procedures more transparent and to achieve more trade facilitation, a number of measures have been taken in past few years. With the introduction of ASYCUDA++ and Direct Traders Input (DTI) automation in customs clearance has begun. Recently, a full automation scheme is on way of implementation in collaboration with the Chittagong Chamber and the Task Force. Once the full automation is completed the importers and exporters will be able to access customs server from their offices or homes and will be able to submit their customs declaration online.
Exemptions from Customs Duty:
i) Capital machinery; ii) Raw materials of Medicine; iii) Poultry Medicine, Feed & machinery; iv) Defence stores;
v) Chemicals of leather and leather goods; vi) Private power generation unit; vii) Textile raw materials and machinery; viii) Solar power equipment; ix) Relief goods;
x) Goods for blind and physically retarded people; and xi) Import by Embassy and UN.
http://www.asiatradehub.com/bangladesh/tax.asp
You May Also Find These Documents Helpful
-
Janet (taxpayer) residing in Australia is named as the sole beneficiary of a property (1.85 hectares) with a large homestead as a result of the death of a relative on 7/10/2010. The property is not used for commercial purposes and at the date of death, the property was valued at $1.45million. Settlement took place on 21/12/2010. After moving into the homestead shortly after taking ownership, she planned to take a one-year trip which she had been planning for some time in late 2011. The taxpayer felt that the homestead was far too large for her (she is single),…
- 2094 Words
- 9 Pages
Powerful Essays -
In any restaurant, caffe, bar, night club, RSL or any other hospitality establishment it is compulsory if you wish to serve any type of alcoholic beverages you will need to obtain a liquor license, under the Liquor Act 2007 and the Liquor Regulation 2008.…
- 2113 Words
- 9 Pages
Better Essays -
(TCO D) A residence in Brevard County has an assessed value of $150,000. Its owner qualifies for an old age exemption of $10,000 and a homestead exemption of $20,000. The property tax rate is $5 per $100 AV. What will be the property tax bill on this property?…
- 1215 Words
- 5 Pages
Satisfactory Essays -
In addition, taxes affect the distribution of income. Progressive taxes take a higher percentage of a person’s income as their income raises. This makes the distribution of income after tax more equal than the distribution before tax.…
- 1547 Words
- 4 Pages
Better Essays -
The Shack, written by William P. Young, tackles one man’s quest for faith and reassurance in God through several metaphors, parables and symbols. These symbols are used to compare the story religion itself; and from this comparison it is easier to grasp a deeper understanding. However, with this underlying symbolism, it’s possible to over analyze and disregard the fictitious nature of the book. Despite this, there are many symbols within The Shack that are essential to the story and the deeper significance within it.…
- 1488 Words
- 6 Pages
Better Essays -
4. Tax: Customers pay tax only for the amount they use not for the entire value of the item.…
- 1327 Words
- 6 Pages
Good Essays -
f) Where can you find a copy of the Australian Constitution? How does the Constitution influence the…
- 4590 Words
- 18 Pages
Satisfactory Essays -
* Individuals are required to pay the government a portion of the money they earn; this portion is an income tax.…
- 1952 Words
- 8 Pages
Good Essays -
1 TABL2751 – Business Taxation TABL2751 BUSINESS TAXATION (Taught concurrently with LAWS3147 – Elements of Income Tax Law) Course Outline Semester 1, 2014 Part A: Course-Specific Information Please consult Part B for key information on ASB policies (including those on plagiarism and special consideration), student responsibilities and student support services. Australian School of Business Taxation and Business Law 2 TABL2751 – Business Taxation Table of Contents 1 PART A: COURSE-SPECIFIC INFORMATION 1 1 STAFF CONTACT DETAILS 1 2 COURSEDETAILS 1 2.1 Teaching Times and Locations 1 2.2 Units of Credit 1 2.3 Summary of Course 1 2.4 Course Aims and Relationship to Other Courses 1 2.5 Student Learning Outcomes 2 3 LEARNING AND TEACHING ACTIVITIES 4 3.1 Approach to Learning and Teaching in the Course 4 3.2 Learning Activities and Teaching Strategies 4 4 ASSESSMENT 5 4.1 Formal Requirements 5 4.2 Assessment Details 5 4.2.1 Tutorial participation 5 4.2.2 Response to tutorial problems 6 4.2.3 Mid-semester exam 7…
- 3432 Words
- 14 Pages
Powerful Essays -
Miner, B. 1991. The Danger of Harmless School Mascots. In Rethinking Columbus: A special issue of Rethinking Schools: 67.…
- 1893 Words
- 8 Pages
Powerful Essays -
Although there is no legal definition to differentiate the taxes based on income from taxes that are not, we believe that a tax based on income implies a tax system in which the tax payable is calculated on a concept of revenue less allowable expenses incurred.…
- 459 Words
- 2 Pages
Good Essays -
What is an income tax? Tax levied by a government directly on income, especially an annual tax on personal…
- 993 Words
- 4 Pages
Good Essays -
A tax is hereby imposed for each taxable year on the taxable income of every corporation.…
- 3297 Words
- 14 Pages
Powerful Essays -
Contents Introduction 3 Objectives and Methodology 5 Choice of Methodology 5 Type of Research 5 Questionnaire 6 1. Conditions of Business in Afghanistan 7 1.1 Geography 7 1.2 People of Afghanistan 8 1.3 Political System 8 1.3.1 Current Political Situation 9 1.4 Current Economic Situation 10 1.4.1 Living Conditions 11 1.5 Business opportunities in Afghanistan 12 1.5.1 Investment Opportunities 13 1.6 Agriculture 13 1.6.1 Opportunities 13 1.6.2 Agriculture Investment Opportunities 14 1.6.3 Major Commercial Crops Production and Processing 15 1.6.4 Investment in Agriculture Infrastructure 16 1.7 Logistics and Transport 17 1.8 Opportunities in Mining 17 1.9 Oil and Gas Reserves in Afghanistan 18 1.10 Energy and Power 19 1.11 Investment Opportunity in Housing 22 1.12 Telecommunications 23 1.13 Afghanistan Carpet Industry 23 1.14 How can we develop Afghanistan Economy 24 2.…
- 15822 Words
- 64 Pages
Powerful Essays -
It all began with a remark made by Bangladesh Jamaat-e-Islam Dhaka city leader Rafiqul Islam Khan. Since Sheikh Hasina’s government came into office in early 2009, it has been thwarting political activity of Jamaat and of its student wing Islami Chhatra Shibir and harassing the leaders and activists of these two organizations in the street and in their offices and residences. In such a context, in a discussion program organized by Shibir on the life of the Prophet Muhammad (peace be upon him) in Dhaka on 17 March 2010, Rafiqul Islam Khan tended to compare the difficulty the Islamic party people were facing to that of the Prophet Muhammad and his companions in the seventh century. He also reportedly said that Jamaat chief Motiur Rahman Nizami was made a target of political vendetta by Sheikh Hasina’s government, and in this respect he pointed to the fact that Prophet Muhammad also faced a comparable situation when he was preaching Islam.…
- 3116 Words
- 13 Pages
Powerful Essays