Corporate Tax in Bangladesh

Corporate taxation in Bangladesh applies to a wide range of business entities and is administered by the National Board of Revenue (NBR). Understanding who must file, what rate applies and how liabilities can be legitimately reduced is essential for any company operating in the country.

Who is subject to Bangladesh income tax?

Every company, branch office, liaison office and registered representative in Bangladesh must file an annual tax return with the NBR.

What does a company need to file?

An annual company tax return discloses the company’s income, expenses, net profit before tax, assets and liabilities. This information is used to determine the company’s tax liability and the taxes already deducted at source.

Corporate tax rates

The tax liability depends on the company’s activity and legal status. The applicable rates are:

Type of company	Tax rate on profit
Private limited company, non-listed company, non-resident company	35%
Publicly traded company listed on a stock exchange	25%
Publicly traded bank, insurance or non-banking financial institution	40%
Non-publicly traded bank, insurance or non-banking financial institution	42%
Merchant bank	37.5%
Cigarette manufacturing company	45%
Tobacco product manufacturing company	45%
Mobile operator company	45%

Capital gains are taxed at 15%.

Minimum tax

If a company’s normal tax liability falls below the minimum threshold, it must pay a minimum tax of 0.3% on gross receipts.

How corporate tax can be reduced

Companies can legitimately reduce their tax burden through a number of provisions:

1. Offsetting taxable losses, which can be carried forward for up to six years
2. Depreciation allowances
3. Tax exemption for newly established industrial undertakings
4. Tax exemption on income from the tourist industry
5. Tax exemption for newly established physical infrastructure facilities
6. Tax exemption for manufacturing companies that set up plants in BEPZA (Bangladesh Export Processing Zone Association) areas
7. A 10% tax rebate in the IPO year for public limited companies that float an Initial Public Offering by transferring 20% of paid-up capital to a stock exchange
8. Exemption for company provident fund and gratuity income, if approved by the NBR
9. Rebates for approved Corporate Social Responsibility (CSR) activities

Filing deadline

A company must file its annual tax return by the 15th day of the seventh month following the close of its tax year. For example, if the accounting year ends on 30 June 2015, the filing deadline is 15 January 2016. Extensions may be granted with the permission of the Deputy Commissioner of Taxes.

Withholding taxes

Companies that make payments to suppliers, service providers and employees must deduct tax at source at the specified rates and deposit it to the government. Withholding tax returns are filed every six months (in December and June) and must include all amounts subject to tax deduction at source, along with copies of the treasury challans.

Payroll taxes

Where employees have taxable income, companies must deduct tax from salaries at the applicable average rate and deposit it through a treasury challan using the employee’s zone-specific code. Both the tax deducted at source and the salary amounts are reported in the withholding tax return.

Indirect tax

Bangladesh imposes Value Added Tax (VAT) on final consumption. Companies must register for VAT under an activity-specific code. The general VAT rate is 15% on the value of a product or service, though truncated base values create different effective rates. When buying VAT-applicable goods and services, a company deducts VAT at source (VDS) and deposits it to the government exchequer through a treasury challan. The VAT return reports all VDS amounts deposited together with the corresponding values of products and services.

For tailored guidance on Bangladesh’s corporate tax system, professional advice from an experienced tax consultant is recommended.