Individual Tax Free Income Threshold

Type of Taxpayers Tax free Income Limit

Last Year This Year

Individual 220,000 250,000

Women and 65 above aged taxpayers 275,000 300,000

Retarded taxpayers 350,000 375,000

Liberation war wounded gazeted freedom fighters 400,000 425,000

1

Individual Tax RateLast Year This Year

Income Rate Income Rate

First taka 220,000 Nil First taka 250,000 Nil

Next taka 300,000 10% Next taka 400,000 10%

Next taka 400,000 15% Next taka 500,000 15%

Next taka 500,000 20% Next taka 600,000 20%

Next taka 30,00,000 25% Next taka 30,00,000 25%

Amount over taka 44,20,000 30% Amount over taka 47,50,000 30%

Any income of an individual being a non-resident foreigner

30% Any income of an individual being a non-resident foreigner

30%

Minimum Income tax payable by individual taxpayer:Dhaka & Chittagong City Corporation : 5,000Other City corporation : 4,000Other areas : 3,000

2

Surcharge for individual taxpayer based on net wealth

Last Year This YearNet Wealth Surcharge

RateNet Wealth Surcharge

Rate

More than 2 crore but not more than 10 crore

10% More than 2.25 crore but not more than 10 crore

10%

More than 10 crore but not more than 20 crore

15% More than 10 crore but not more than 20 crore

15%

More than 20 crore but not more than 30 crore

20% More than 20 crore but not more than 30 crore

20%

More than 30 crore 25% More than 30 crore 25%

Minimum surcharge payable is Tk. 3,000

3

Corporate Tax RateCompany Last Year This Year

Publicly traded company 27.50% 25%

Publicly traded company declaring at least 30% dividend

24.75% 25%

Publicly traded company declaring less than 10% dividend

35% 25%

Non-publicly traded company 35% 35%

Bank, Insurance & Financial Institute:Listed & 4th Generation Banks and FIsNon-listed

42.50%42.50%

40%42.50%

Corporate Tax Rate-2Company Last Year This Year

Merchant Bank 37.50% 37.50%Cigarette : Non Publicly Traded Publicly Traded

45%40%

45%45%

Cellular Phone: Non Publicly Traded Publicly Traded

45%40%

45%40%

Minimum Tax payable on gross turnover

0.30% 0.30%(0.10% in first three

years)

Separate tax rate for cigarette and co-operative society

• Income from Cigarette manufacturing business shall be taxed uniformly @45% irrespective of the status of the taxpayer i.e similar tax rate to apply for publicly listed, public/private companies, firm or individual taxpayers

• Trading, money lending, housing business, interest and dividend income of co-operative societies shall be taxed @ 15%. Sub-section (a) and © of Section 47 deleted accordingly

6

Uniform Income Year

Calendar year shall be the income year for bank, insurance and financial institutions

Financial year i.e July-June shall be income year for all other taxpayers

This new provision shall be applicable from 1st July 2016

7

Imposition of additional tax for unauthorized foreign employment

Additional tax @50% of tax payable or taka 5 lakh (whichever is higher) shall be imposed for unauthorized employment of foreign citizens under Section 16B

Imprisonment up to three years along with penalty of taka 5 lakh under Section 165C for unauthorized foreign employment

Any tax holiday or other tax benefit shall be cancelled in case of such unauthorized foreign employment

8

Imposition of penalty for submission of fake audit report

Penalty of Taka 1 lakh shall be imposed under section 129B for submission of fake audit report

Imprisonment of three years along with fine of Taka 1 lakh under section 165AA

9

Tax HolidayTunnel Kiln technology brickfield has been

included in the list of tax holiday industriesAutomobile, Bi-cycle and Tyre Manufacturing

industries have also been included in the list of tax holiday industries

10

Tax Exemption for investors in Economic Zone and Hi-Tech Park

Developers of Economic Zone and Hi-tech parks as approved by Bangladesh Economic Zone authority (BEZA) and Hi-tech Park Authority shall enjoy following tax exemptions under SRO No-217 & 229/2015, date 08 July 2015:

11

Year Exemption

First 10 (Ten) Years 100%

11th Year 70%

12th Year 30%

Tax Exemption for industrial undertakings within Economic Zone and Hi-Tech Park area

Industrial undertakings established within Economic Zone and Hi-tech parks shall enjoy following tax exemptions under SRO No-

226 & 228/2015, date 08 July 2015:

12

Year Exemption

First 3 (Three) Years 100%

4th Year 80%

5th Year 70%

6th Year 60%

7th Year 50%

8th Year 40%

9th Year 30%

10th Year 20%

Expansion of deemed income under section 19

• Purchase of any material on credit, by any person other than persons engaged in real estate business, for the purpose of construction of house property shall be deemed to be the income of the assessee if the taxpayer fails to pay the liability in respect of such purchase under Section 19(29)

• Any unspent amount of repair and maintenance allowance under Section 25(h)(1) shall be deemed to be income under Section 19(30)

• Excess tax exempted income or income that is subject toreduced tax rate shown in revised return under sections 78 or 93 compared to income shown in original return shall be deemed to be income classifiable under the head "Income from other sources” [under Section 19(31)]

13

Reduction of tax payable under Section 19BBBBB

Area Size of HP Previous Rate Proposed Rate

Paurashava of any district HQ

200 SQM or less

Tk. 1,000/sqm 600/sqm

> 200 SQM Tk. 1,500/sqm 800/sqm

Other area excluding city corporation or district HQ Paurashava

200 SQM or less

Tk. 700/sqm 400/sqm

200 SQM or less

Tk. 1,000/sqm 600/sqm

14

Changes in computation of business income

• Financial institutions to get similar benefit like banks in computing interest income from classified loan under Section 28(3)

• Obsolescence allowance for any fixed asset excluding imported software under Section 29(1)(xi)

• Excess perquisite limit enhanced to Tk. 450,000 from Tk. 350,000 under Section 30(e)

• Maximum allowable limit for business car purchase shall be 10% of paid up capital together with reserve and accumulated profit under Section 19(27)

15

Withholding tax• TDS on Government employee salary at average rate

under Section 50• Withdrawal of 5% upfront tax on Treasury Bond and

Treasury Bill under Section 51• 3% AIT on MRP of cigarette to be collected at VAT

collection stage under Section 52B• TDS @ 0.30% of ticket value or cargo value for

carrying passenger or cargo as a final tax on income of travel agency or cargo agency under Section 52JJ. Ticket value or cargo value to include all charges except embarkation fees, travel tax, flight safety insurance, security tax and airport tax

16

Withholding tax…. contd• TDS rate has been increased to 4% from existing 3%

on Vatable value of band roles of soft drinks and mineral water under Section 52S

• Withdrawal of TDS under Section 52U on computer or computer accessories, jute, cotton and yarn purchased through local LC

• 0.60% TDS on all exports including ready made garments under Section 53BB and Section 53BBBB [SRO No-224/2015, date- 2 July 2015, shall be applicable till 30 June 2016]

• TDS from all exports shall be considered final discharge of tax liability under Section 82C

17

Withholding tax…. contd• Dealer’s promotional charges or fees or commission

etc. to be subject to TDS net under Section 53E• TDS under Section 53EE on foreign buying house

commission bas been increased to 10% from existing 7.5%. TDS from buying house commission shall be considered as final discharge of tax liability

• 10% TDS under Section 53F on savings or fixed deposits of any public university, educational institutions enlisted for MPO of Government and professional institutes such as ICAB, ICMAB and ICSB

18

Withholding tax…. contd

• Lease or transfer of possession of any asset brought to capital gain tax net. Any person being an individual, a firm, an association of persons, a Hindu undivided family, a company or any artificial juridical person shall be subject to 4% AIT under Section 53HH at the time of registration of such lease or possession deed

• TDS on advertising has been increased to 4% from existing 3% under Section 53K

19

Withholding tax…. contd

• TDS @ 10% on realized gain from sale of shares by a company or firm under section 53O has been withdrawn

• 15% TDS on signing money including any rent compensation payable by a real estate developer company to the land owner under Section 53P

20

Withholding tax on other services under Section 52AA

SL. No

Description of payment Rate

1. Catering service 10%

2. Cleaning service(a) commission(b) gross receipts

10%1.5%

3. Collection and recovery agency-(a) commission(b) gross receipts

10%1.5%

4. Contract or toll manufacturing 10%

5. Credit rating agency 10%

21

Withholding tax on other services under Section 52AA

SL. No

Description of payment Rate

6. Event management-(a) commission(b) gross receipts

10%1.5%

7. Indenting commission 7.5%

8. Meeting fees, training fees or honorarium 10%

9. Mobile network operator, technical support service provider or service delivery agents engaged in mobile banking operations

10%

22

Withholding tax on other services under Section 52AA

SL. No

Description of payment Rate

10. Motor garage or workshop 5%

11. Printing service 3%

12. Private container port or dockyard service 5%

13. Private security service provider-(a) commission(b) gross receipts

10%1.5%

14. Product processing charge 10%

15. Shipping agency commission 5%

23

Withholding tax on other services under Section 52AA

SL. No

Description of payment Rate

16. Stevedoring/berth operation commission 10%

17. Supply of manpower-(a)commission(b)gross receipts

10%1.5%

18 Transport provider 3%

19. Any other service which is not mentioned in Chapter VII of this Ordinance and is not a service provided by any bank. insurance or financial institutions

10%

24

Non-resident withholding tax under Section 56

SL. No

Description of payment Rate

1 Accounting or tax consultancy 20%

2 Advertisement making 15%

3 Advertisement broadcasting 20%

4 Advisory or consultancy service 30%

5 Air transport or water transport 7.5%

6 Architecture, interior design or landscape design

20%

7 Artist, singer or player 30%

25

Non-resident withholding tax under Section 56

SL. No

Description of payment Rate

8 Capital gain received-(a) from capital assets (not being securities listed with stock exchange)—(b) by a company or firm if such gain is arising from securities listed with any stock exchange not exempted from tax in the country of such non-resident-----

15%

10%

9 Certification 30%26

Non-resident withholding tax under Section 56

SL. No

Description of payment Rate

10 Charge or rent for satellite, airtime or frequency

20%

11 Contractor, sub-contractor or supplier 5%

12 Courier service 15%

13 Dividend-(a) company------(b) any other person, not being a company--

20%30%

27

Non-resident withholding tax under Section 56

SL. No

Description of payment Rate

14 Insurance premium 10%

15 Interest, royalty or commission 20%

16 Legal service 20%

17 Machinery rent 15%

18 Management or event management 20%

19 Pre-shipment inspection service 30%

28

Non-resident withholding tax under Section 56

SL. No

Description of payment Rate

20 Professional service 20%21 Salary or remuneration 30%22 Exploration or drilling in petroleum

operations5.25%

23 Survey for oil or gas exploration 5.25%24 Any service for making connectivity

between oil or gas field and its export point

5.25%

25 Any other payments 30%

29

Final discharge of tax liabilities Exclusion from section 82C

- any taxpayer engaged in gas distributions Inclusion in section 82C

- All savings instruments under Section 52D - Buying house commission under Section 53EE - Bank interest earned by public universities, educational institutes enlisted in MPO of Government and ICAB, ICMAB and ICSB under Section 52F©

-TDS on income of travel agents etc under Section 52JJ

30

Provisions for scrutiny assessment under Section 82BB

• Acknowledgement receipts against all returns submitted under Section 82BB issued to be considered as assessment order

• Income shall be computed after making the adjustments in respect of any arithmetical error in the return and any incorrect claim, if such incorrect claim is apparent from the existence of any information in the return, within one year of submission of return;

• A demand notice along with details of income computation to be given to the taxpayer with 30 days of such computation

31

Transfer Pricing Issues • The Deputy Commissioner of Taxes may, by notice in

writing ask the taxpayer to submit a report from a Chartered Accountant or a Cost and Management Accountant, if value of international transactions exceeds three crore taka during an income year

• A new report form has been prescribed replacing the existing rule

• Submission of report for all cases exceeding 3 crore taka transaction is no more compulsory

• Penalty @ 2% of transaction value is to be imposed under Section 107HH for non-submission of statement of international transaction under section 107EE

32

e-TIN related amendments• Penalty of taka 50,000 under Section 124AA for non-

verification of e-TIN by the service providers mentioned in section 184A

• e-TIN shall not be required for a non-resident foreigner for being director of a company in Bangladesh

• E-TIN of a parent or guardian of a student shall be required for getting admitted in English medium school located in any city corporation or any Paurashava of district head quarter

• No e-TIN shall be required for ISD telephone connection

33

Employee Tax • Basic salary, Bonus and festival allowances are to be taxed

similarly for all Government and private sector employees; [SRO No- 198/2015, date 30 June 2015]

• Tax free cash medical allowance- 10% of basic salary or taka 1 lakh 20 thousand, whichever is lower

• Cash house rent allowance, 50% of basic or Tk. 25,000 per month (whichever is lower) shall be tax exempted

• 5% notional income or taka 60,000 whichever is higher for use of vehicle provided by employer

• Gratuity is to be tax free up to 2 crore and 50 lakh taka• Workers’ Participation Fund payments received by workers

as defined in Section 2(65) of the Labour Act 2006 be exempted from tax ; WPF receipts by officers shall be fully taxable

34

Other amendments 1 • Dividend received from a listed company up to taka

25 thousand shall be tax exempted• Imported software to be allowed depreciation @10%• Cost value of vehicles for depreciation purpose shall

be allowed up to taka twenty five lakh• Interest from wage earner bonds (Taka, USD, Pound

Sterling, Euro) fully exempted• Income from local software development, ITES

services and NTTN shall be tax free up to June 2024

35

Other amendments 2 • Income (except interest and dividend) earned by

educational institutions enlisted for MPO of Government that follows Government’s educational curriculum and run by Government rules and regulations shall be tax exempted

• Income (except interest and dividend) of public university and professional institutions such as ICAB, ICMAB and ICSB shall be tax exempted

• Foreign professionals from England, Wales, Scotland, Pakistan and India shall not be allowed for tax practice in Bangladesh

36

Other amendments 3 • Export of handicrafts shall be tax exempted till June

2019• Income from Jute goods and textile business to be

taxed @ 15% till June 2019 [SRO No-193-194/2015, date 30 June 2015]

• Five year tax holiday (at reducing rates) for BSEC [SRO No-195/2015, date 30 June 2015]

• Income earned by partnership firm and company from sale of shares listed in stock exchange shall be taxed @ 10% [SRO No-196/2015, date 30 June 2015]

37

Other amendments 4 Income from hatchery, poultry, poultry feed, dairy, pelleted feed of fish and livestock, seed production, seed marketing, frog, horticulture, sericulture, pisciculture, floriculture, mushroom production shall be taxed at following reduced rate [SRO No-199/2015, date 30 June 2015] :

38

Amount of income Tax rateUp to Tk. 10,00,000 3%Next Tk. 20,00,000 10%Remaining amount 15%

AIT at reduced rate on import of certain goods

2% advance income tax shall be imposed from 1 July 2015 on import of following goods [SRO No-192/2015, date 30 June 2015] :

Refined or crude fuel Engine oil Lubricant Hide and skin MS Rod and Steel Propane and Butane Mobile phone

39