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:: Income Tax Incentives ~

The income tax 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 residentship. 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. The are salary, interest on security, house property, agriculture, business and profession, capital gain and other sources. 

Submission of income tax returns are 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.


Tax Rates:     Tax Rate for the Assessment Year 2002-2003 will be as follows:

1.     Personal Income Tax Rate:

(i)

On first Tk. 75,000/- of total income

Nil

(ii)

On next Tk. 1,50,000/- of total income

10%

(iii)

On next Tk. 1,50,000/- of total income

15%

(iv)

On next Tk. 2,50,000/- of total income

20%

(iv)

On the balance of total income

25%

 

Note: Minimum tax payable will be Tk. 1,200/-

     2.  Corporate Tax Rate:

(i)

Publicly traded companies (excepting Bank, Insurance, Leasing Companies & other financial institution)

30%

(ii)

Non-publicly traded companies (excepting Bank, Insurance, Leasing Companies & other financial institution)

35%

(iii)

Bank, Insurance, Leasing Companies & other financial institution

40%

 

Note: Publicly traded companies will get 10% tax rebate if they declare dividend @ 20% or more.

Tax Incentives
Tax holiday for newly set-up industrial undertakings, identifiable expansion units, physical infrastructure facilities, Computer data entry and software development & tourist industries for 5/7 years depending on location (sec. 46A, of the Income Tax Ordinance, 1984).

Income of private sector power generation company for 15 years from the date of commercial production; Income of expatriate personnel working in such company for three year from the date of his arrival; Interest on foreign loans received by such company; Royalties, technical know-how fees and technical assistance fees payable by such company and capital gain on transfer of shares of such company. These exemption will be available subject to the fulfillment of conditions laid down in the private sector power generation policy of Bangladesh (SRO No. 114-L/99 dt. 26.5.99).

Income from industrial undertaking set-up in Export Processing Zone for ten years from the date of commercial production (SRO 289-L/89 dt. 17.7.89).

Fifty percent of the income of an assessee (other than non-Bangladeshi company) attributable to export sales (para 28 of Part A of Sixth Schedule of the Income Tax Ordinance, 1984)

Income of a newly established hospital for a period of five years subject to the fulfillment of certain conditions (SRO No. 180-L/99 dt. 27.7.99).

Fifty percent of the income of an assessee being resident derived from business of shipping in international waters with the ships whose port of registry is in Bangladesh (para 31, Part A, Sixth Schedule of the Income Tax Ordinance, 1984).

Income from fish farming, poultry farming, cattle farming, dairy farming, frog farming, horticulture, mushroom farming, floriculture, pelleted poultry and fish feed production upto 2005 A.D. provided that if the income of such farming exceeds one lakh taka, ten percent of such income shall be invested in the purchase of bonds or securities issued by the Government within ninety days of the end of the income year (SRO 127-L/2000 dt. 11.5.2000). 

Income of a stock exchange in Bangladesh (SRO 102-L/96 dt. 18.8.96).

Income of the Investment Companies run on commercial basis and established in Bangladesh under an agreement between GOB and any foreign Government or investment organisation formed by the foreign Government for a period mentioned in the Agreement (SRO 32-L/90 dt. 24.1.90).

Capital gains arising from the sale Govt. securities and stocks and shares of public companies listed with a stock exchange [sec. 32(7) of the Income Tax Ordinance, 1984 ].

Capital gains arising from the transfer of lands or buildings to a new company registered under the companies Act, if the whole amount is invested in the equities of the said company [sec. 32 (10) of the Income Tax Ordinance, 1984].

Salaries and allowances of expatriate personnel employed in a foreign aided project established under an agreement between the Bangladesh Government and foreign Government or organisation sponsored by a foreign Government. Provided the expatriate personnel are the citizens of such foreign country (SRO No. 207-L/97 dt. 08.09.97).

Salary received by or due to any person who is neither a citizen of Bangladesh nor was resident in Bangladesh in any of the four years immediately preceding the year in which he arrived in Bangladesh for a period of two years from the date of his arrived in Bangladesh if such salary is received for services rendered by him during such period as a professor or teacher at a recognised University College or other educational institution in Bangladesh (Para 8 of Part A of Sixth Schedule of the Income Tax Ordinance, 1984 )

Salary received by or due to any person who is neither a citizen of Bangladesh in any of the four years immediately preceding the year in which he arrived in Bangladesh for a period not exceeding three years from the date of his arrival in Bangladesh, if such salary is received as a technician under a contract of service to be approved by the Board. This exemption will continue for another five years if the concerned technician continues to be employed by the same employer and tax on the salary of such technician is payable by the employer. (para 15 & 16 of Part A of Sixth Schedule of the Income Tax Ordinance, 1984);

Dividend income received by an assessee other than a company from a public limited company listed with the stock exchange upto Tk. 25,000/- (para 24 of Part A of Sixth Schedule of the Income Tax Ordinance, 1984);

Any investment made between 01/7/2002 to 30/6/2005 in the production of goods and services shall be exempt from tax (sec. 19AAA of the Income tax Ordinance, 1984);
Income of agro processing industry between 01/7/2002 to 30/6/2005 shall be exempt from tax (SRO No. 175-Income tax/2002 dt. 04/07/2002);

Income of computer software business between 01/7/2002 to 30/6/2005 shall be exempt from tax (SRO No. 172-Income tax/2002 dt. 04/07/2002);

Concessionary 20% tax rate for new industrial companies (SRO No. 177-Income tax/2002 dt. 04/07/2002);

 


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