Tax Update 2021-2022 Bangladesh
1.) Tax Rate:
a.) Minimum Tax Rate
It is proposed to decrease the business turnover tax rate for individual taxpayers from 0.5%
b.) Reduction of tax rates of the company
- Publicly traded company tax rate is proposed to be reduced from 25% to 22.5%.
- It is proposed to reduce the tax rate of non-publicly traded companies from 32.5% to 30%
- The tax rate on artificial entities and taxable entities other than companies and associations has been fixed @ 30%.
- It is proposed to impose 15% tax on income of Private universities, medical colleges and engineering colleges.
- It has been proposed to make the tax rates of mobile financial service providers similar to those of listed banks and insurance companies.
c.) One Person Company (and PC) tax rate
- The tax rate of one Person Company (OPC) is proposed to be 25%.
d.) Taxpayer of Third gender
- It has been proposed to increase the tax-free limit for third gender taxpayers to TK 350,000.
- If a taxpayer employs 10% of the total workforce of the organization or more than 100 employees from the third gender as the hiring authority, the taxpayer will be given the following tax relief:
- 5% of tax payable or ;
- 75% of the total salary paid to third gender employees is whichever less is.
e.) Tax rate of Individuals
Individual taxpayers’ income tax rates and tax rates remain unchanged as in 2020-2021.
|Existing Tax Step||Existing Tax rate|
|Up to Tk. 3 Lac.||0|
|On next Tk. 1 Lac.||5%|
|On next Tk. 3 Lac||10%|
|The next Tk. 4 lac||15%|
|The next Tk. 5 lac||20%|
|The rest of the money||25%|
f.) Surcharge rationalization
- It has been proposed in 5 steps instead of the existing 7.
- The provision of paying surcharges on assets in case of non-income has been cancelled.
- The abolition of the minimum search charge has been proposed.
g.) Rationalization of fishery income tax rate
- Instead of the existing three steps, 4 steps have been proposed
- It is proposed to levy 15% tax on the remaining income of TK. 30 lacs instead of 10% on the remaining income after Tk 20 lacs.
|Existing Provision||Proposed Provision|
|Amount of income||Tax Rate||Amount of income||Tax Rate|
|On income up to the first Tk 10 lac.||0||On income up to the first Tk 10 lac.||0|
|On income up to the next Tk 10 lac.||5%||On income up to the next Tk 10 lac||5%|
|On the remaining income||10%||On income up to the next Tk 10 lac||10%|
|On the remaining income||15%|
2. Deduction at Source
a.) Rationalization of source tax rate at import stage
The source tax rate at the import stage has been proposed as follows:
- 2% on Cement industry raw material instead of existing 3%.
- 1% on Ocean liners instead of existing 2%.
- 5% on all types of cash registrar results, propellers instead of zero.
- 3% on Coconut fiber instead of existing 5%.
- All types of alcohol and perfumes 20% instead of 5%.
b.) Reduction of tax rate source at the supply stage
- It is proposed to reduce the tax rate on cement, iron and iron products from 3% to 2%.
- The following 3 steps have been proposed instead of the existing 4 steps of tax rate against supply.
|Rank||Existing provisions||Proposed provisions|
|1.||Base value||Rate||Based on value||Rate|
|Upto Tk. 15 lacs||2%||Upto Tk. 50 lacs||3%|
|2.||Between Tk. 15 lacs – Tk. 50 lacs||3%||Between Tk. 50 lacs – Tk. 2 crore.||5%|
|3.||Between Tk. 50 lacs- 1 core||4%||More than Tk. 2 crore||7%|
|4.||More than Tk. 1 crore||5%|
c.) Reduction of common source tax rates
- If a resident contractor provides any service in Bangladesh to a non-resident contractor, it is proposed to decrease the rate of withholding tax from 10% to 7.5%.
- It has been proposed not to deduct income tax at source when paying workers up to TK 25,000 as Workers Participation Fund or Workers’ Participatory Fund.
d.) Rationalization of tax rates at general sources
- In case of sale or lease of any commodity property or rights through public auction, it is proposed to collect advance tax at source at the rate of 10% instead of existing 5% from the auction buyer.
- Under the Overseas Employment and Immigration Act 2013, it has been proposed to collect TK 50,000 at the source of renewal.
- It has been proposed to add provision for deduction at source while paying bills as opposed to receiving electricity supply from all types of power generating companies instead of rental only.
e.) Decrease in advance tax on old vessels
For those vessels which have passed 10 years the advance tax per passenger has been increased from Tk.125 to Tk 100.
3.) Expansion of tax base
a.) It is proposed to impose the obligation to accept TIN in the following fields.
- Purchase of savings certificates above Tk 2 lacs.
- Postal savings deposit above Tk 2 lacs.
- Home design approval.
- Registration of Cooperative Societies.
b.) It is proposed to empower e-commerce platform as a source tax deductible authority.
4.) Payment of Automated Invoice Tax
Payment of taxes up to TK 5 Lac through automated platform.
5.) Bangladesh Digital Transformation
In addition to the existing 22 sectors in the digital transformation of Bangladesh, the following 6 more sectors have been declared tax free sectors.
a.) Cloud Service
b.) System Integration
c.) e-learning platform
d.) e-book publications
e.) Mobile applications development service and
f.) IT Freelancing
6. Incentive to ‘Made in Bangladesh’ in mega industrial production
To take Bangladesh ahead in the mega industry, an auto mobile (three wheelers and four wheelers) manufacturing company established with an investment of at least Tk. 100 crore or more shall enjoy 20 year tax exemption.
7. Incentives for Made in Bangladesh in the production of Home Appliances
Washing machines, blenders, microwave ovens, electric sewing machines, induction cookers, kitchen hoods and kitchen knives & kitchen appliances industry will enjoy 10 years tax exemption.
8.) Industrialization of agricultural products
i.) Such as value addition of agricultural products produced in Bangladesh through industrialization are:
a.) Fruit processing
b.) Vegetable processing
c.) Production of dairy and dairy products and
d.) Baby food producers.
Entrepreneur has been given 10 years tax exemption
ii.) Entrepreneurs manufacturing agricultural machinery have been given tax exemption for a period of 10 years.
9.) National skills development and employment incentives
Institutions engaged in providing education and training in the following sectors to create skilled human resources suitable for industrialization shall enjoy tax exemption for a period of 10 years.
- Diploma Degree and Vocational Education in all fields of Agricultural Fisheries Science and IT and
- Automobiles, Aircraft, Food Preservation Foot over, Glass Mining Mechanical, Shipbuilding, Leather, Refrigeration, Ceramics, Mechanist, Garments, provide professional training on Design, and Pattern Making, Pharmacy, Nursing, Integrated Medical, Radiology & Imaging, Ultrasound, Dental, Animal Health & Production Services, Clothing & Garment Finishing, Poultry Farming.
10.) Light engineering entrepreneurial creation and employment incentives
Which are all kinds of products in the light engineering industry are:
i.)Will be used only in industrial factories and
ii.)There will be no complete instrument parts.
Manufacturing entrepreneurs have been given 10 years tax exemption.
11. Entrepreneurial creation and employment incentives in the IT hardware sector
In the IT sector, Bangladesh is dependent on imports for self-sufficiency in creating industries and enterprises and as an incentive for employment. CCTV and pen drive manufacturers have been given tax exemption for a period of 10 years.
12. Ensuring affordable and decentralized medical care
Income from hospital operation has been proposed to enjoy tax exemption for 10 years provided that-
- Hospital must be located outside Dhaka, Narayanganj, Gazipur and Chittagong districts and
- There should be at least 250 bed hospital or 200 bed specialized hospital.
13. Incentives for Women Entrepreneurs
If the annual turnover of an SME sector owned by a woman entrepreneur is up to TK 70 lacs, the income of that company is exempted from income tax.
14. Assistance in creating bond market for long term capital collection
In order to create a market for easy circulation of Sukuk bonds for long-term capital mobilization, it is proposed to waive the tax applicable in case of re-transfer of property from the trust or SPV to the parent company.
15. Reduction of depreciation rate for building & structure
|Existing rates||Recommended rate|
16. Formalization of the economy
i.) The following expenses are proposed to be required to be paid through bank transfer as well as mobile financial services or MFS.
a.)Salary allowances in excess of Tk 15,000
b.)Any amount of rent and
c.)If the amount of expenditure of any other nature exceeds TK.50, 000
ii.) It is proposed to deduct an additional 50% of the existing source tax rate if the supply and contracting bill is not received through banking or mobile financial services (MFS).
17. Assistance in micro credit collection
In order to provide easy access to microcredit, it is proposed to exempt income of organization licenses by Micro Credit Regulatory Authority.