Tax Planning in Business: Bangladesh Perspective

21 Pages Posted: 5 Jun 2007

Swapan Kumar Bala

University of Dhaka

Date Written: May 18, 2007

This paper highlights the tax planning issues in the context of business environment in Bangladesh. Given the complexity and the tax law ambiguity prevailing in Bangladesh, this paper encompasses the traditional tax planning devices along with a brief overview of the Scholes-Wolfson paradigm of tax planning strategies. The fiscal plans are referred to the related tax law provisions (mentioned in the appendices in a very organized manner), which are expected to be very useful for the existing and potential businessmen.

Keywords: Tax compliance, Tax minimization, Effective tax planning, Tax strategy, Tax incentives

JEL Classification: E62

Suggested Citation: Suggested Citation

Swapan Kumar Bala (Contact Author)

University of dhaka ( email ).

University of Dhaka Dhaka 1000 Ramna, Dhaka, Dhaka 1000 Bangladesh

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Corporate Tax Preparation

Corporate Tax Preparation Services

Corporate Tax Preparation Service in Bangladesh


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Corporate Tax Rate in Bangladesh:

Besides, there are several tax exemption facilities for companies based on the nature of business & location.

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Tax Planning and Consulting-  To reduce the tax exposure of companies and give advice about the same, it is very important to understand the tax laws of the country, especially Double Tax Agreements. Our team of highly qualified Tax Experts is well versed in these laws and use this knowledge to provide the best advice to our clients.

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Corporate tax planning and tax advisory services are critical in any business and serve as a backbone for the company’s long-term success. Certified Accountants (CAs), Certified Cost & Management Accountants (CMAs), tax practitioners, advocates, and some financial advisors are all examples of tax advisors in Bangladesh. Tax advisors are well-versed and up-to-date in matters of tax law, as well as IFRS and other tax guidelines, regardless of their training. 

Organizations may hold their administrations to speak to the organizations under the watchful eye of tax specialists and courts to resolve issues relating to tax laws and IFRS rules, because tax advisors are knowledgeable in tax laws and IFRS rules. Taxes are a necessary part of doing business. Your company faces several risks if you don’t use proper corporate tax planning and tax advisory services.

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The operations of a company must run smoothly and efficiently. This rule does not have any exceptions. If your company doesn’t do this, you’re jeopardizing your ability to make strategic decisions for the future. That’s already a lot to consider. It certainly helps if a company doesn’t have to worry about lowering its tax burden and can instead focus on improving its operations.

Corporate tax planning and tax advisory services are essentially designed to assist a company in becoming more tax efficient. This allows the company to remain competitive in its field. A company is in a better position to deal with any changes that occur in its external environment when proper tax planning is done. Proper tax planning makes it easier for businesses to cut costs and increase profits for shareholders. These profits can then be re-invested back into the company. When this occurs, it indicates that the business is thriving and, as a result, it attracts even more investors, improving the company’s financial position.

Several methods will be used in comprehensive tax planning. Engaging the corporate tax planning and tax advisory services of a company that is well-versed in this area is the most straightforward way to do so. Take, for example, Network BD. Several local and international companies have benefited from our tax experts’ assistance in meeting their compliance requirements and obligations. We can assist you in the same way.

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Bangladesh Corporate Tax Rate 2022 Data - 2023 Forecast - 1997-2021 Historical

The Corporate Tax Rate in Bangladesh stands at 30 percent. source: National Board of Revenue (NBR), Bangladesh

Corporate tax rate in bangladesh averaged 30 percent from 1997 until 2022, reaching an all time high of 40 percent in 1998 and a record low of 25 percent in 2016. this page provides - bangladesh corporate tax rate - actual values, historical data, forecast, chart, statistics, economic calendar and news. bangladesh corporate tax rate - values, historical data and charts - was last updated on march of 2023., corporate tax rate in bangladesh is expected to reach 30.00 percent by the end of 2023, according to trading economics global macro models and analysts expectations. in the long-term, the bangladesh corporate tax rate is projected to trend around 30.00 percent in 2024, according to our econometric models..

Bangladesh Corporate Tax Rate

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Corporate tax: How does Bangladesh compare with peers?

Some economists argue in favour of reducing the corporate tax rate citing countries with lower corporate tax rates that have outperformed other countries in terms of economic growth.

Illustration: Collected

During the last two decades, corporate income tax (CIT) rate has increased from 30% in 2003 to 33 % in 2021. During the same time frame, while most regional peers of Bangladesh have lowered CIT, Bangladesh has clearly headed in the opposite direction. 

Charging a high CIT to corporations is not without its limitations. Consequences of such tax policies lead to lower levels of after-tax income and retained earnings for companies. This means a higher tax rate reduces the residual income of a business, after tax, that it has available for retention or distribution (dividends).

Furthermore, fueled by a higher CIT rate, double taxation may have barred proliferation of local and foreign direct investment. 

Currently, investors in Bangladesh are subject to a 10-15% tax on dividend earnings (non-resident individuals/companies tax rate 20%-30%). Local investors are subject to 10% tax on capital gains, compared to 15% tax for non-residential individuals and 5% for sponsors.

In practice, while all investors are subject to double taxation, a higher CIT rate only makes matters worse. Double taxation refers to the deduction of tax, first, from the pre-tax earnings of a corporation, and then, a second tax deduction, as personal income tax, on the investor's share of disbursed income. 

Photo: Abrar Ahmed/ TBS Illustration

According to the KPMG Taxation Report, corporate tax rate in Bangladesh for all unlisted public and private limited companies is 32.5%. However, corporate income tax rate (CIT) varies significantly based on the type of company.

For public companies listed on the exchange, the tax rate is 25%. While banks, insurance companies and other financial institutions are subject to 37.5% CIT (if listed) or 40% (if not listed).

Finally, the CIT rate for tobacco manufacturers and mobile network operators (MNO) is 45%, (40% for listed MNOs).

While the 33% CIT can be a burden for some corporations, the Finance Act 2019 and its latter amendments add to the woes of some companies.

According to the Section 16G of the Finance Act 2019, any listed company that retains more than 70% of its Net income after tax, has to pay 10% tax on the total amount being transferred to retained earnings.

Such a policy, however inadvertently, forces a dividend payout threshold for the companies, which can potentially take a toll on a company's strategic planning, operational performance and liquidity.

A more worrying trend can be observed in terms of tax collection. During the last 5 fiscal years, Tax Revenue as a percentage of Targeted Tax Collection has fallen drastically. FY 2015-2016, while the NBR was able to outperform the Tax collection targets by 2%, FY 2020 it was facing a shortfall of 32% (tax collection 68% of target). While a large chunk of it may be due to mismanagement in the collection of tax, a portion of it may be attributable to higher tax rates that have influenced offshore money-laundering. 

While targets and estimates may often not match reality, a study conducted by NBR last year paints a worrying picture. According to NBR, out of 213,505 companies registered under RJSC, only 45,000 submitted tax returns. This implies that CIT compliance rate is 21%, i.e. – only 1 in 5 registered businesses pay tax.

Despite this, policy makers shy away from implementing major tax reforms, by cutting taxes for businesses. 

corporate tax planning in bangladesh

Some economists argue in favour of reducing the corporate tax rate citing countries with lower corporate tax rates that have outperformed other countries in terms of economic growth. 

During most of the last two decades, the average CIT rate in Asia has lingered at around 22%. Throughout this time period, two regional peers, Vietnam and Thailand, have held their CIT rates below the Asian average.

Therefore, their story of success macroeconomically is no coincidence. According to the World Bank, export of goods and services relative to nominal GDP throughout South Asia, since the early 2000s, has been an average of 20%. Vietnam and Thailand have outperformed all South Asian countries by averaging 78% and 67% respectively.

FDI to Thailand and Vietnam historically has been equivalent to as high as half of all of South Asia's FDIs. The results of this are well captured by the per capita GDP of these countries when compared to South Asian averages.

Besides capping the tax rates at 20%, Vietnam has implemented other business-friendly measures, such as the Preferential Tax Rates, which allows selected industries to enjoy CIT rates of 10% only.

In fact, Bangladesh, too, has similar policies. Currently, eight types of industrial companies, including - Jute, Textile, Knitwear, Poultry, Private Educational Institute, etc., are enjoying waived tax rates ranging between 3% to 15% based on various criteria. 

Other tax incentives, such as the ones dedicated for businesses operating in EPZs, serve as a relief for qualifying industries. However, the CIT rate for the vast majority of industries is still 33%. 

CIT is also not the only form of tax corporations are subject to. For firms for which CIT may not be directly applicable, a withholding tax is charged at a rate ranging between 0.3% to 15%. This withholding tax is charged on any of the 25 types of income of a firm listed by the NBR.

On the other hand, industries such as mobile phone operators are subject to 2% and 1% source tax on gross receipts respectively, given that gross receipts exceed BDT 5M.

corporate tax planning in bangladesh

There are further other indirect forms of taxes, such as VAT, tariffs, etc. In an ever so competitive business world, all these taxes are seen as a burden on local corporations.

For years, however, economists in Bangladesh have been divided over the benefits of lowering corporate taxes. 

"Uzbekistan, Montenegro and Hungary have a single-digit corporate tax rate of 7.5 percent. Lower corporate tax rate is one of the main drivers of economic development for Ireland," said executive director of the Policy Research Institute Ahsan H Mansur in a 2018 interview.

"We have to be at par with similar countries. Compliance will rise and the tendency to hide incomes will reduce if the tax rate is reduced," he said back then, adding that corporate tax rate usually hovers between 20 percent to 25 percent in developed and emerging nations. 

Golam Moazzem, research director of the Centre for Policy Dialogue, is however sceptical.

"Correlation between corporate tax rate cut and new investments does not strongly exist in Bangladesh. This is because of weakness in financial reporting," he said in a 2019 interview. 

"It may not be the case that in every instance entrepreneurs will increase investment in case of corporate tax cut," he added. 

Tax reforms, meanwhile, are easier said than done. For businesses to run efficiently, infrastructure, such as roads, logistics and power, is of paramount importance. These infrastructures are, by and large, funded by the government using tax revenue. 

In conclusion, the corporate and the policy makers must find common ground – an optimal corporate tax rate. As we graduate from LDC, challenges await Bangladesh and its businesses in the years ahead. Paired with this, the threats of the pandemic have not passed as well. The road ahead is long and difficult, but in order to build a resilient and sustainable economy, Bangladesh needs to rethink its CIT rate. Such a move will likely encourage investments (FDI inflows), increase output (GDP) and boost our trade capabilities (export), opening doors of possibilities for us in the decades to come.

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Simple Tax Guide for Americans in Bangladesh

Simple Tax Guide for Americans in Bangladesh

US Expat Taxes - Bangladesh

At Taxes for Expats we have been preparing U.S. tax returns for U.S. Citizens and green card holders working in Bangladesh for over 4 years. Our clients hail from all parts of the country - Dhaka and Chittagong, Khulna and Rajshahi, Narayanganj and Nasirabad.

As a U.S. Citizen or green card holder you are legally required  to file a U.S. tax return each year regardless of whether you already pay taxes in your residence country.

We offer professional tax services. That means we figure out the best and most optimal way to file your U.S. tax return and avail you of all possible exclusions and deductions. But just as importantly - avoid the errors that would allow IRS to disallow your return and levy fines & penalties on top. You can also do them yourself - not that we recommend it . For more information please see IRS .

The expatriate Foreign Earned Income Exclusion can only be claimed if you file your tax return on a timely basis. It is not automatic if you fail to file and can even be lost.

We have many clients living in Bangladesh and know how to integrate your U.S. taxes into the local income taxes you pay.  Any income tax you already pay in Bangladesh can be claimed as against the tax liability on your U.S. return on the same income.

As an expat living abroad you get an automatic extension to file until June 15th following the calendar year end.  (You cannot file using the calendar year as is standard in Bangladesh for U.S. tax purposes). You must, however, pay any tax that may be due by April 15th in order to avoid penalties and interest. You can get an extension to file (if you request it) until October 15th. There are other forms which must be filed if you have foreign bank or financial accounts;  foreign investment company; or own 10% or more of a foreign corporation or foreign partnership.   If you do not file these form or file them late, the IRS can impose penalties of $10,000 or more per form.  These penalties are due regardless of whether you owe income taxes or not. We have helped hundreds of expats around the world catch up with their past U.S. taxes because they have failed to file U.S. tax returns for many years. This is, in fact, our specialty and we offer a 10% discount to clients to wish to file multiple tax return s at once and get in full compliance with the IRS. Work with a recognized expert to help you prepare your American tax return. We can also provide tax planning and advice with other expatriate tax; we look forward to working with you.

Bangladesh personal income tax rates

Below we include information on the Bangladesh Tax System for the American Expatriates.  

Bangladesh personal income tax rates for assessment year 2018 - 2019 is progressive up to 25% .  

Income tax is one of the main sources of revenue in Bangladesh. It is a progressive tax system. Bangladesh Income tax is imposed on the basis of ability to pay. The more a taxpayer earns the more tax he should pay. This is the basic principle of charging income tax in Bangladesh. The tax system aims at ensuring equity and social justice. Tax rates in Bangladesh also differs between male and female individuals.  

Time to submit income tax return: Unless the date is extended, by the 30th day of September next following the income year.  

Who should submit Income Tax Return ?

Bangladesh Corporate Tax Rates

The standard rate of corporate tax in Bangladesh is 25% in 2018 - 2019 tax year. This is the standard corporate tax rate applicable to publicly traded companies in Bangladesh, a list including tax rates for other corporations are as follows:  

Income Tax Authorities in Bangladesh  

Income Tax Authorities in Bangladesh are:

Tax Withholding Functions  

In Bangladesh withholding taxes are usually termed as Tax deduction and collected at source. Under this system both private and public limited companies or any other organization specified by law are legally authorized and bound to withhold taxes at some point of making payment and deposit the same to the Government Exchequer. The taxpayer receives a certificate from the withholding authority and gets credits of tax against assessed tax on the basis of such certificate.

Tax Rebate for Investment

Rate of Rebate: Amount of allowable investment is either up to 25% of total income or BDT 500,000 whichever is less. Tax rebate amounts to 10% of allowable investment. Types of investment qualified for the tax rebate are:

Assessment Procedures  

Appeal against the order of DCT  

A taxpayer can file an appeal against DCT's order to the Commissioner (Appeals) / Additional or Joint Commissioner of Taxes (Appeals) and to the Taxes Appellate Tribunal against an Appeal order.  

Major Areas for Final Settlement of Tax Liability in Bangladesh

Tax deducted at source for the following cases is treated as final discharge of tax liabilities. No additional tax is charged or refund is allowed in the following cases:  

Tax Holiday  

Tax holiday is allowed for certain industrial undertaking, tourist industry and physical infrastructure facility established between 1st July 2008 to 30th June 2011 in fulfillment of certain conditions.  

Tax Rate For Foreign Companies

Tax incentives exist for investors in general, whether or not they are Bangladeshi.

Capital Gains Taxation

Main allowable deductions and tax credits, other corporate taxes, bangladesh value added tax (vat) rates  .

The general rate of Value Added Tax (VAT) in Bangladesh is 15% .  


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  1. 1)Taxation in Bangladesh : বেতন খাতে কর নির্ধারণ ( ক্লাস 1)

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  4. Taxation in Bangladesh : অংশীদারি কর নির্ধারণ ( ক্লাস 1)

  5. M.Com(4th sem)Corporate Tax Planning & Management{2022-Paper}MDU

  6. M B A final year: Corporate Tax Planning // Suggestions-2020


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