Bangladesh Tax Update 2021-2022

People must pay income tax on their complete income from all sources, including exempt income.Taxes differ depending on an individual's residence status within a tax year. For tax reasons, individuals can be categorized as either residents or non-residents.

Residents are taxable on all of their income, no matter where it comes from. Foreign nationals are normally taxable only on income generated from operating in Bangladesh and foreign money received through Bangladesh sources, despite the fact that they are considered residents for tax reasons.

Non-residents are only taxed on income earned, accumulated, or considered to be earned in Bangladesh. We provide efficient payroll and tax return services.

According to NBR statistics, 71,500 taxpayers have already enrolled in the system to file income  tax returns for the fiscal year 2021-22.

Key message

Expatriates are taxed on money earned in Bangladesh for labor, regardless of where it is paid, as well as international total income from Bangladesh sources.

     Various Sort Of Tax In Bangladesh

Income tax

Paying your first income tax is a watershed moment in each citizen's life. However, for a first-timer, the procedure might seem overwhelming and cumbersome, and some of the jargon can be confusing. 

Our goal is to make your economic lives easier by simplifying income taxes. Anyone with a source of income is required to submit income tax returns.

Income tax has a long history in Bangladesh, dating back to 1860, when the British Raj enacted the Income Tax Act. Various adjustments have occurred since then.

Rate

Tax Level

0%

Up to Tk 3,00,000

10%

Tk 4,00,000  to  Tk 7,00,000

15%

Tk 7,00,000  to  Tk11,00,000

20%

Tk 11,00,000 to Tk16,00,000

25%

Above Tk 16,00,000

Note : The annual income tax return was much more than 2,800 million last year. Upwards of 160 million individual income tax returns are likely to be filed for the 2021 tax year, with the great majority arriving before the typical April tax deadline. 

Value Added Tax

On the sales price of most imports and deliveries of goods and services, the average rate of VAT is 15%.

Corporate Taxation

The tax legislation levies a 25% income tax on listed corporations and a 32.5 percent tax on non-listed entities. This year's corporate tax rate adjustments include:

1.  2.5 % extra fee on cigarette businesses' earnings.

2. A reduction in the company taxation rate for readymade clothes industries to 15%. (from 20 percent)

3. An additional 1% rate decrease (to 14%) for readymade clothes enterprises that hold a globally renowned green building certificate.

Certain businesses continue to be taxed at varied rates. Consider the following scenario:

1. Banking, insurance, and non-banking financial firms are taxed at 40% if they are publicly traded and 42.5 percent if they are not.

2. Manufacturers of cigarettes and mobile phone operators are subject to a 45 percent tax (before the additional surcharge on cigarette manufacturers noted above)

3. Companies that manufacture and export knitwear and woven clothes pay a 20% corporation tax rate, whereas companies that manufacture or export jute goods pay a 10% taxation rate.

In most cases, a company's export revenues are tax-free to the tune of 50%.

The tax day (the deadline for filing a income tax return) for businesses has become the 15th day of the seventh following month the end of the fiscal year; alternatively, if the fifteenth day falls on or before September 15, the tax day is the 15th September of the year going to follow the end of the fiscal year.

The Formalization Economy Tax

1. It is recommended that the following costs be required to be paid by bank transfer or mobile financial accounting  services (MFS).

a. Salary allowances greater than Tk 15,000

b. Any rent amount and

c. If the total cost of any other type of expenditure exceeds TK.50, 000

2. If the supplying and contracting invoice is not obtained through bank or mobile financial services, it is suggested to deduct an extra 50% of the existing code tax rate.

Holidays Taxes

The Finance Bill 2017 makes no modifications to the present tax law that grants tax breaks to:

1. Export processing zones are home to a variety of enterprises (5 to 7 years, depending on location)

2. Investing in economic zones over a period of ten years and economic zone development (12 years) 

3. Industrial endeavors (5 to 10 years, depending on location)

4. Infrastructure (physical) (10 years)

4. Non-coal-based energy production companies (15 years) coal-based energy production companies (15 years) 

6. Coal-based power generation businesses (10 years).

The tax refund break for businesses that provide "information technology enabled services" will stay in place until 2024, despite the fact that Finance Bill 2017 specifies these services expressly.

Digital Transformation Tax

The following six areas have been designated tax-free in addition to the current 22 sectors in Bangladesh's digital transformation.

1.  Cloud-based service

2. System Integration 

3. e-learning platform

4.  Publications of e-books

5.  Development of mobile apps and

6. Freelancing in Information Technology

 Buildings and Structures Tax

 

Existing rates

Recommended rate

General building

10%

5%

Factory building

20%

10%

Is There Really A Delay In Tax Refunds In 2022?

Due to the backlog of returns created by the COVID-19 outbreak, many taxpayers had to wait longer than the normal 21 days — those as long as 8 weeks — to collect their refunds last year.

The Internal Revenue Service (IRS) still is working through a backlog of 2020 tax refunds. Many tax experts predict that some refunds may be delayed this year as a result of this.

Benefits Of Taxation

1. Save interest

If a taxpayer files an ITR late, they must pay interest. According to IRS rules, if a taxpayer does not pay advance tax or pays less than 90% of his or her responsibility, he or she must pay interest under Article 234B at the rate of 1% every month or part of a month until the tax is paid.

2. You can avoid a fine of up to Tk 10,000

There is a penalty for filing an ITR late.According to Income Tax laws, filing an ITR after the required date might result in a penalty of up to Tk 10,000.

3. Avoid receiving a notification from the Internal Revenue Service

The IRS may issue you a notice if you ever do not submit your Income tax return by the deadline. And it may become an uncomfortable annoyance for you. As a result, filing your ITR on time is always preferred.

4. Getting a loan is simple

Income tax return filers have a better chance of having their loan applications approved by lenders. The bank will want a copy of your ITR report as evidence of income statement when you apply for the loan.

5. Losses can be carried forward

You can carry over losses to later years provided you file your ITR before the deadline, according to IRS guidelines. This provision will assist you in lowering your tax refund  liability on future earnings.

Taxation supports the country on a variety of levels, including national growth, infrastructural improvements, societal elevation, and even national welfare systems.

If you want experienced support with payroll Tax service and BPO services, please contact us.