The definition of a “Permanent Establishment” in relation to income from business or profession includes:
Income year is as follows:
Provided that the authorities may allow a different financial year for a company which is a Subsidiary/Branch Office/Liaison Office of a company incorporated outside Bangladesh if such company is required to follow a different financial year for the purpose of consolidation of its accounts with its parent.
The rules for carry forward and set-off of losses for businesses are set out below:
| Income Head | Current Year Sit-off | Carry Forward Limit |
|---|---|---|
| Capital gain | Only against any income from capital gain and cannot be set off against any other heads of income. | Can be carried forward for 6 successive years and set off against income from capital gain. |
| Income from business | Only against income from business and cannot be set off against any other heads of income. | Can be carried forward for 6 successive years and set off against income from business. |
| Income from speculation business | Only against income from speculation business and cannot be set off against any other heads of income. | Can be carried forward for 6 successive years and set off against income from speculation business. |
| Income from tobacco business | Only against any income from tobacco business and cannot be set off against any other heads of income. | Can be carried forward for 6 successive years and set off against income from tobacco business. |
| Unabsorbed depreciation | Only against income from business and cannot be set off against any other heads of income. | Unlimited period. |
However, no loss can be adjusted or carried forward if generated from a source which is subject to exemption, reduced rate of tax or minimum tax. Also, if a business is succeeded by any means other than inheritance, the successor cannot set off the loss of the predecessor against any of their own income.
The applicable rates of tax for companies are as follows:
| Type | Rate |
|---|---|
| Publicly traded companies if more than 10% of paid-up capital is issued through IPO* | 20% |
| Publicly traded companies if 10% or less than 10% of paid-up capital is issued through IPO* | 22.5% |
| Non-listed companies* | 25% |
| One-person companies* | 20% |
| Banks, insurance and financial institutions (except merchant banks) if not publicly traded | 40% |
| Banks, insurance and financial institutions (except merchant banks) if publicly traded | 37.5% |
| Merchant banks | 37.5% |
| Cigarette, bidi, jorda, gul and all tobacco manufacturers | 45% |
| Publicly traded mobile phone operating companies (At least 10% of paid-up capital transferred through stock exchange of which maximum 5% is transferred via pre-initial public offering) | 40% |
| Private mobile phone operating companies | 45% |
| Trust, fund, association of persons and other taxable entity* | 25% |
| Recognized provident fund, approved gratuity, superannuation and pension fund | 15% |
| Co-operative society registered under Co-operative Societies Act, 2001 | 20% |
| Private university, medical/dental/engineering college and colleges solely dedicated to imparting education on ICT | 15% |
| Dividend income | 20% |
| Export income except for individual, firm and HUF | 12% |
| Export income except for individual, firm and HUF with “LEED Certificate” | 10% |
| Yarn production, dyeing, finishing, conning, fabric making, cloth dyeing, printing, or any such process (applicable from 1 July, 2022 to 30 June, 2025) | 15% |
| Poultry, shrimp & fish hatcheries and fish farming | 0-15% |
*2.5% higher tax if all income, and annual expense & investments exceeding Tk. 500,000 for every single transaction and Tk. 3,600,000 in total are not made through banking channel.
All companies/Branch & Liaison Offices in Bangladesh are required to obtain an e-TIN from the authorities. Companies are required to file their tax returns on the later date of the following:
Such tax returns must be accompanied by:
Bangladesh has extensive withholding tax requirements on all local payments. Please contact us for exhaustive listing of such requirements. The withholding tax requirements from payments to non-residents (unless reduced under a Double Taxation Avoidance Agreement) are as follows:
| Nature of Payment | Rate |
|---|---|
| Advisory or consultancy service | 20% |
| Pre-shipment inspection service | 20% |
| Professional service, technical services, technical know-how or technical assistance | 20% |
| Architecture, interior design or landscape design, fashion design or process design | 20% |
| Certification, rating etc. | 20% |
| Charge or rent for satellite, airtime or frequency, rent for channel broadcast | 20% |
| Legal service | 20% |
| Management service including event management | 20% |
| Commission | 20% |
| Royalty, license fee or payments related to intangibles | 20% |
| Interest | 20% |
| Advertisement broadcasting | 20% |
| Advertisement making or digital marketing | 15% |
| Air transport or water transport except in certain circumstances | 7.5% |
| Supply of goods | 7.5% |
| Capital gain | 15% |
| Insurance premium | 10% |
| Rental of machinery, equipment etc. | 15% |
| Artist, singer or player | 30% |
| Nature of Payment | Rate |
|---|---|
| Services provided under contracts executed by contractors, subcontractors, and sub-subcontractors for manufacturing, processing, conversion, works, construction, engineering, or any other similar work | 7.5% |
Dividend:
| 20% 20% |
| Salary or remuneration | 30% |
| Exploration or drilling in petroleum operations | 5.25% |
| Survey for coal, oil or gas exploration | 20% |
| Any service for making connectivity between oil or gas field and its export point | 5.25% |
| Any payments against any services not mentioned above | 20% |
| Surveyors’ fees of general insurance company | 5.25% |
| Bandwidth payment | 10% |
| Courier service | 15% |
| Any other payments | 20% |
VAT is levied on the supply of goods and the provisions of services, and on the import of goods and services. Supplies of goods and services without consideration are valued at their fair market price.
Registration
Filing and Payment
The Government of Bangladesh has entered into agreements (DTAA) with the Governments of other countries for avoiding double taxation. This treaty includes provision for relief from tax on income such as dividend, royalty, technical fees, business profits, etc. Bangladesh currently holds agreements on avoidance of double taxation with 41 countries:
Bangladesh offers a variety of tax and VAT incentives to encourage growth and attract foreign investments in some industries. These incentives are designed to boost manufacturing, encourage exports, and promote the use of advanced technologies while ensuring sustainable industrialization. The following sections outline a sector-wise breakdown of these incentives.
Subcontracting permitted with export-oriented companies inside & outside the EPZ.
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