Personal income tax rates have undergone significant changes after remaining unchanged for 5 years. The
comparison between existing and proposed rates are as follows:
Pension fund payments previously exempt from tax is now conditional on fund being government fund or
funds approved by NBR.
Gratuity payments is still tax exempt up to Tk. Two crore Fifty lac provided the fund is approved by NBR or
received from any government fund.
Any person required to have 12-digit e-TIN will have to file tax returns even if the person does not have
taxable income.
Individuals submitting income tax return online for the first time will get tax credit of Tk. 2,000.
Requirement for obtaining e-TIN has been extended to include the following:
Individuals having gross annual receipts above Tk 3 crore will be subject to minimum tax of 0.50% of gross
receipts. Higher rate if receipt from mobile phone operations or tobacco products.
1. Tax of non-resident remains unchanged at 30%.
2. Female taxpayers and taxpayers above 65 years
old, will enjoy tax exemption up to Tk. 350,000.
1. Person obtaining for credit card*
2. Person selling land*
*exempted from filing annual tax return
3. Disabled taxpayers are exempt up to Tk. 450,000.
4. Gazetted freedom fighter taxpayers are exempt
up to Tk. 475,000
3. Extended to include person participating in zilla
parishad election as well.
4. Person obtaining or maintaining licensed
firearms
Personal Income Tax
Bangladesh Finance Bill 2020 Highlights
Existing
Amount of Taxable Income Rate
Proposed
First Tk. 250,000 or as applicable
Next BDT 400,000
Next BDT 500,000
Next BDT 600,000
Next BDT 3,000,000
Nil
10%
15%
20%
25%
30% On the balance
Amount of Taxable Income Rate
First Tk. 300,000 or as applicable
Next BDT 100,000
Next BDT 300,000
Next BDT 400,000
Next BDT 500,000
Nil
5%
10%
15%
20%
25% On the balance
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Advance income tax payable on owning motor vehicles has been increased as follows:
Capital Gains was limited to gains in relation to transfer of capital assets. This is now extended to cover the
transfer of a business/undertaking.
Any individual with gross wealth in excess of Tk. 40 lac is required to furnish a Statement of Asset, Liability
and Lifestyle along with their annual returns. The limit was previously Tk. 25 lac. Individual (except
shareholder directors) may opt not to file if total income is less than Tk. 4 lac instead of the previous limit of
Tk. 3 lac.
Special tax treatments fund:
Corporate tax rates remain unchanged for all categories except non-listed companies, which will enjoy a
reduction of rate from 35% to 32.5%:
Allowable limit for expenditure on Overseas Travel has been decreased from 1.25% to 0.5% of total
disclosed turnover.
Tax allowance for Promotional Expenses is now capped to 0.5% of disclosed turnover. Promotional
expense has been defined as “any expense incurred by way of giving any benefit in kind or cash or in any
other form to any person for the promotion of business or profession”.
Corporate Income Tax
Bangladesh Finance Bill 2020 Highlights
Type and engine capacity of motor car Existing (BDT) Proposed (BDT)
Car/jeep – Up to 1,500 cc
Car/jeep – 1,501 to 2,000 cc
Car/jeep – 2,001 to 2,500 cc
Car/jeep – 2,501 to 3,000 cc
Car/jeep – 3,001 to 3,500 cc
Car/jeep – More than 3,500 cc
Microbus
15,000
30,000
50,000
75,000
100,000
125,000
20,000
25,000
50,000
75,000
125,000
150,000
200,000
30,000
1. Addition of Section 19AAAA reintroduces the
provision to invest in securities without
investigation of the source of fund, provided
that 10% tax on the investment is paid and not
withdrawn within three years from the day of
the investment.
2. Addition of Section 19AAAAA allows individuals
to disclose land, building, apartment, cash and
cash equivalents. The rate of tax on property
varies from Tk. 20,000 to Tk 200 per sqm
depending on location and type of property. For
cash and cash equivalent, the tax rate is 10%.
Listed
company
25% 32.5% 37.5% 40% 37.5% 45% 40% 45% 20%
Type
of
Entity
Rate
Listed
bank/
insurance/
NBFI
Non-listed
bank/
insurance/
NBFI
Merchant
bank Cigarette/
Bidi
company
Listed
mobile
phone
Non-Listed
mobile
phone
company
Dividend
income
Non-listed
company
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Introduction of Tax on difference of Investment, Import and Export made at a rate of 50% on the
difference of actual versus reported amount of investment, export of import.
Change in Taxes deducted at source (TDS):
Calculation of Net Profit for allowance of royalty, technical assistance fees or similar fees has been
redefined to exclude net profit as per consolidated financial statements.
Shared economic activities such as ride sharing, coworking space providing and accommodation
providing service are now included under the following tax requirements:
Bangladesh Finance Bill 2020 Highlights
Advance payment of tax is now required for assessee with income above Tk. 6 lac increased from the
previous rate of Tk. 4 lac.
Owner of vehicle, accommodation or any other asset
used in such sharing services are required to obtain
e-TIN and file annual returns.
Such services will be subject to TDS at
rate of 3% and 4% if amount over Tk. 25
lac.
Category
Details
E-Tin Annual Returns TDS
1. Interest/profit/discount on securities will be
subject to deduction of tax at 5% at the time of
making payments. The exemption of such TDS on
Treasury bond and Treasury bill is now removed.
2. Definition of payment for purposes related to
TDS now includes any ‘order or instruction of
making payment’.
3. TDS on compensation received for government
acquisition of land has been increased from 2% to
6% within city corporation, paurashava or
cantonment board and from 1% to 3% for other
areas.
4. Local Letter of Credit (LC) transaction is now
subject to TDS at rate of 2%. 7. Dividend paid to non-residents subject to
TDS is now clearly defined to include dividend
paid to company, fund and trust (@ 20%) or any
other person (@ 30%). 5. Export of goods is now subject to TDS at rate
of 0.5% increased from previous rate of 0.25%
6. Foreign remittance subject to 10% TDS is now
more clearly defined and includes the following:
providing any service rendered in Bangladesh; or
rendering any service or performing any task by a
resident person in favour of a foreign person; or
allowing the use of any online platform for
advertisement or any other purposes.
Exemptions under this includes any ITES services or
other services enjoying tax exemption. It also
exempts remittance from Bangladeshi nationals
working abroad.
Income earned by alternative investment fund under BSEC is now exempted. This was previously limited
to income earned from the fund as opposed to exemption for the fund itself.
Tax benefit for industrial undertaking established between July 2019 and June 2024 is now expanded to
cover the following industries:
The NBR may now condone or extend time limits and deadlines in period of any disaster like epidemic,
pandemic or war and the order may be issued with retrospective effect.
Electrical transformer;
Artificial fiber or manmade fiber manufacturing;
Automobile parts and components manufacturing;
Automation and Robotics design, manufacturing
including parts and components thereof;
Artificial Intelligence based system design and/or
manufacturing;
Nanotechnology based products manufacturing;
Aircraft heavy maintenance services including parts
manufacturing
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Value Added Tax & Supplementary Duty
Bangladesh Finance Bill 2020 Highlights
Bank will collect 15% VAT on the payment to any Non-Resident , unless VAT is paid by the recipient of the service
and can show treasury challan.
Inputs on which Input tax credit can be claimed is now clearly defined and listed.
Advance Tax on import of production materials for manufacturing is to be 4% instead of 5%.
Timeline to claim rebate on Advance Tax increased to four tax period from two.
Re-introduction of VAT exemption for sub-contractors for any project, provided VAT is paid by the main contractor.
Supplier/ service provider cannot do reducing adjustment if does not have VAT deduction certificate from customer.
Customers need to issue VAT deduction certificate to vendor at the time of making payment. This was previously
required to be provided within 3 days of submission of VAT.
VAT return now can be submitted next working day if 15th is a Government Holiday. Currently VAT return is filed
within 15th irrespective of holidays.
NBR now can extend time for submission of VAT return with a provision of not paying penalty and interest during
any natural disaster, pandemic, and emergency situation.
For any economic activity, negative net amount for a tax period can only be claimed for refund after adjusting in next
6 tax periods.
In case of Appeal at Commissioner level or Tribunal level, 20% tax in the order in question need to be submitted
instead of 10%.
VAT has been exempted for the import, production and trade of COVID-19 test kits, PPE and all sorts of masks,
infection preventing medicines.
Major changes to VAT rates are as follows: Major changes to SD are as follows:
Trading Stage (Goods)
SC/ HS Existing
Rate
Proposed
Rate
Type of
Goods/Services
1105.20.00
1105.20.00
1105.20.00
Potato flakes
Maize (corn) starch
Router
0%
0%
0%
5%
5%
5%
S024
S036
S060.00
Furniture
(showroom stage)
Air-conditioned launch
Buyer of Auction Goods
5%
5%
5%
7.5%
10%
7.5%
Trading Stage (Services)
52.05 to 52.07
54.02 to 54.10
&
55.12 to 55.16
Cotton
Synthetic yarn
TK 4/KG
5%
TK 3/KG
TK 6/KG
Trading Stage (Fixed rate)
Trading Stage (Goods)
SC/ HS Existing
Rate
Proposed
Rate
Type of
Goods/Services
2402.20.00
2402.90.00
403.99.00
Cigarettes containing
tobacco
Hand/machine made biri
with/without filter
Jorda/gull
55% &
65%
35% &
40%
50%
65%
40%
55%
3304.99.00
6910.00.00
Cosmetics local
manufacture
Ceramic Sink, basin, etc.
5%
0%
10%
10%
S044.40
S012.10
S058.00
BRTA Services (except for
passenger bus, truck, lorry,
ambulance and school bus)
Mobile sim/ rim services
Chartered aircraft and
helicopter services
(except air ambulance)
10%
10%
15%
15%
25% 30%
Trading Stage (Services)
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Contact:
ACE Advisory is a leading provider of specialized back office BPO, advisory and consulting and professional
services in Bangladesh.
This communication contains general information only, and ACE Advisory is not by means of this
communication rendering professional advice or services. before making any decision or taking any action
that may affect your finances or your business, you should consult a qualified professional adviser. ACE
Advisory or its partners shall not be responsible for any loss whatsoever sustained by any person who relies on
this communication.
For more information, contact ACE Advisory (www.aceadvisory.biz).
ACE Advisory
House – 67 (Level – 7), Road 4, Block – C, Banani, Dhaka – 1213, Bangladesh
+880 9638 555 111
Montakim Ahmed
Partner
montakim.ahmed@aceadvisory.biz
Seezan M. Choudhury
Partner
seezan.choudhury@aceadvisory.biz
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