Tax Compliance in Bangladesh

This guide walks through the taxation system of Bangladesh, along with the procedures and timeline for tax compliance. Note that this is a general guideline — there may be additional obligations depending on the type and functions of the entity.

Private limited company / public limited company / joint venture — step-by-step guidelines

Step 1: Tax Identification Number (TIN)

• The Tax Identification Number (TIN) is issued by the National Board of Revenue (NBR) and is a unique 12-digit identification number.
• The TIN determines the tax office and subdivision where the company must report.
• To obtain a TIN for a company, the following documents are needed: Trade License, Incorporation Certificate, Memorandum of Association, and Articles of Association.

Step 2: Day-to-day compliance activities

• Reviewing all invoices received from suppliers, vendors and service providers and calculating the applicable amount of withholding tax.
• Depositing withholding tax to the relevant government authorities along with the relevant challans within the specified time period.
• Collecting receipt copies of the relevant challans.
• Preserving copies of the relevant challans for future reference and submission to the relevant governmental authority.

Step 3: Monthly compliance activities

Monthly Withholding / Tax Deducted at Source (TDS) Statement submission (excluding salary TDS):

1. Preparing the monthly withholding statement.
2. Arranging the relevant withholding tax challans for submission to the respective tax circle office along with the statement.
3. Submitting the monthly TDS statement along with treasury and withholding challans.
4. Collecting and preserving the receipt copy of the monthly TDS statement.
5. Providing documents and explanations as required by the respective Deputy Commissioner of Taxes (DCT).

Monthly Withholding (TDS) Statement submission (salary TDS) follows the same steps for salary expenses.

Step 4: Quarterly compliance activities

• Quarterly advance income tax computation and submission — computing and assisting in payment of advance income tax.
• Quarterly accounting reporting — preparing the quarterly return per Bangladesh Bank, the Bangladesh Investment Development Authority and the NBR, and submitting the financial statements to those authorities as applicable.

Step 5: Semi-annual compliance activities

1. Preparing a semi-annual statement for withholding tax.
2. Arranging the relevant withholding tax challans for submission to the tax office along with the withholding tax return.
3. Submitting the withholding tax return to the respective income tax office.
4. Collecting and preserving the receipt copy of the withholding tax return.
5. Providing documents and explanations as required by the DCT.

Step 6: Annual compliance activities

a) Annual return submission U/S 108 (payment of salary) — preparing and submitting the Sec.-108 return of annual information on salary payments and withholding salary tax, then collecting and preserving the receipt copy.

b) Annual return submission U/S 109 (payment of interest) — reporting the name and address of every person to whom such payment was made or due during the preceding financial year, the amount paid or due, and any other prescribed particulars.

c) Annual return submission U/S 110 (payment of dividend) — reporting the name and address of every shareholder to whom a dividend was paid or distributed during the preceding financial year (where it exceeds the prescribed amount), and the amount paid or distributed.

d) Annual corporate tax return submission — companies in Bangladesh must file an income tax return per the Income Tax Ordinance, 1984:

1. Collecting the necessary information for tax computation and return preparation.
2. Computing the annual tax.
3. Preparing the annual corporate tax return.
4. Submitting the return along with all necessary documents within the specified time period.

The following documents must be submitted with the annual tax return:

• Audit Report — an audited statement of accounts and a computation sheet explaining the difference between the profit/loss shown in the accounts and the income shown in the return, audited per BAS/BFRS by a Chartered Accounting firm enlisted with the Institute of Chartered Accountants of Bangladesh, and audited in accordance with BSA.
• Withholding Tax Return — a copy of the return of withholding tax collected or deducted, submitted to the DCT twice during the financial year in the prescribed manner.
• Pay Order of Remaining Tax — a copy of the pay order for the remaining balance of tax, in favour of the Deputy Commissioner of Taxes under whose jurisdiction the company is an assessee.
• Advance Tax Payment Copy — a copy of advance tax payments, paid quarterly during each financial year.
• Bank Statements — statements from all banks used for commercial transactions in the company's name.

Failure to submit these within the specified dates can trigger several penalties, including fines and imprisonment for varying periods. Companies must also withhold taxes from employees, suppliers and vendors, and submit monthly returns to the NBR, including monitoring individual annual tax return submissions of employees within the stipulated time.

Step 7: Assessment

A company can be assessed under the Simplified Procedure or the Universal Self-Assessment Procedure:

• Under the Simplified Procedure, assessment is made after a hearing before the Deputy Commissioner of Taxes (DCT).
• Under Universal Self-Assessment, the acknowledgement slip is treated as the assessment order — subject to audit.
• A company's tax liability depends on its operations and legal status; the applicable rate of income tax varies accordingly.

Step 8: Appeal

An Appeal Tribunal, generally speaking, is any person or institution with authority to judge, adjudicate on, or determine claims or disputes — whether or not it is called a tribunal.

Under the Income Tax Ordinance, the DCT assesses the total income of the company based on the return, determines the tax payable, and communicates the assessment order within thirty days. The NBR, as the prime authority, is responsible for audits and appeals against persons and companies in Bangladesh.

• If a company wishes, it can appeal against the DCT's order to the Commissioner (Appeals) within forty-five days of the order.
• If aggrieved by the Commissioner's order, it may appeal further to the Appellate Tribunal.
• The assessee or the Commissioner may, within ninety days of receiving the Appellate Tribunal's order, refer any question of law arising from it to the High Court Division. If the High Court Division's judgment is varied on appeal, effect is given to the order of the Appellate Division.