Bangladesh flag Bangladesh: Business Environment

Tax rates in Bangladesh

Tax Rates

Consumption Taxes

Nature of the Tax
Value-added tax (VAT)
Tax Rate
15%
Reduced Tax Rate
Certain products and services are zero-rated, including: immovable property situated outside Bangladesh; goods for export; services directly related to land situated outside Bangladesh; services physically carried out on goods situated outside Bangladesh; supply of service outside Bangladesh; and services included in the customs value of imported goods.
Several reduced rates apply:
- 5%: specified fruits juice; LPG gas; information technology-enabled services (ITES); internet services
- 7.5%: packing paper; self-copy paper; non-AC hotel and restaurant; construction firms
- 10%: electric poles; repair and servicing; transport contractor (except for petroleum goods); printing press.

Exempt items include: certain basic food items for human consumption; supply of unprocessed agricultural, horticultural, or piscicultural products, if the supplier is the producer of the goods; public health and medical services provided by a government entity or an approved charitable institution; sale of vacant land.

Other Consumption Taxes
Excise duties have been abolished on all products except on bank deposits and airline tickets (exemptions are provided for disabled soldiers). An additional duty of 20%, 35%, 65%, 100% or more is levied on certain products, the highest being on beer, alcohol and cigarettes.

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Corporate Taxes

Company Tax
22.5% (reduced from 25% as from 1 July 2021)
Tax Rate For Foreign Companies
Resident entities are taxed on worldwide business income; non-residents are taxed only on Bangladesh-source income.
Branches of foreign companies are taxed at 30%.
Bangladesh provides tax incentives for foreign companies investing in special economic zones and hi-tech park zones (in the form of gradually decreasing tax discounts).
Capital Gains Taxation
Capital gain from the transfer of stocks and shares of public limited companies listed with the stock exchange except listed government securities are taxed at 10% for resident companies and 15% for non-resident shareholders. Income from capital gains is separated from total income and taxed at 15%, regardless of the period of holding of the asset from the date of its acquisition.
Capital losses can only be offset against capital gains.
Main Allowable Deductions and Tax Credits
All expenditures incurred to generate taxable income are generally tax-deductible. Amortisation of tangible and intangible assets is tax-deductible at rates ranging from 2% to 50%.
Goodwill cannot be amortised for tax purposes. Interest charges, including profit shares distributed to an Islamic bank, are also tax-deductible. Subject to conditions, the cost of free samples and entertainment expenses are allowed as deductions. Provision for bad debts is not allowed.
Service companies exporting at least 50% of their services, scientific research firms, companies investing in strategic sectors (outside the Grand Dhaka region) and suppliers of companies operating in a free trade area (at least 40% of their total sale) may be eligible for the free-trade area regime, benefiting from total or partial tax exemptions (corporation tax, VAT, stamp duty, capital gains).
Tax losses can be carried forward in full up to six years. The carryback of losses is not permitted.
Other Corporate Taxes
No property tax is levied on real estate or land. Nevertheless, real estate transactions (sale, rent, transfer) are subject to stamp duty. Other types of stamp duty apply to most financial transactions. Rental income on plant and machinery paid to non-residents is subject to a 15% withholding tax.
Employers are not required to pay social security contributions and no salary tax is payable.
All enterprises with a gross income above BDT 5 million are subject to an alternative minimum tax of 0.6% on gross receipts, if the amount due is higher than corporation tax. This rate is reduced to 0.1% for manufacturing companies in their first three years of operation. The rate for manufacturers of cigarettes and other tobacco products is 1%, for mobile phone operators it is 2%.
Entities with an annual turnover between BDT 2.4 million and BDT 8 million are subject to an annual turnover tax at 3%, which replaces VAT and corporation tax.
Other Domestic Resources
Consult the Doing Business website, to obtain a summary of the taxes and mandatory contributions.

Country Comparison For Corporate Taxation

  Bangladesh South Asia United States Germany
Number of Payments of Taxes per Year 33.0 26.7 10.6 9.0
Time Taken For Administrative Formalities (Hours) 435.0 273.5 175.0 218.0
Total Share of Taxes (% of Profit) 33.4 43.9 36.6 48.8

Source: Doing Business, Latest available data.

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Individual Taxes

Tax Rate

Income tax Progressive rates from 0% to 25%
First income tax bracket up to BDT 300,000  0%
Next BDT 100,000 5%
Next BDT 300,000 10%
Next BDT 400,000 15%
Next BDT 500,000 20%
Any excess amount 25%
Minimum tax 0.25% (reduced from 0.5% as from 1 July 2021) on gross receipts from all sources where an individual has gross receipts of at least BDT 30 million in an income year if this is higher than the tax liability calculated at the progressive rates.
Allowable Deductions and Tax Credits
The basic exemption for women and individuals above 65 years of age is BDT 350,000, increased to BDT 450,000 and BDT 475,000 for individuals with disabilities and freedom fighters, respectively. For parents or legal guardians of  physically challenged persons, the exemption is increased by BDT 50,000.
Payments to non-residents for services are deductible from personal income tax. Tax rebate on investment is provided for individuals investing in life insurance premiums, pension schemes, recognised charitable organisations, zakat funds, stocks and shares of listed companies and purchase of laptops (at varying rates between 10% and 15%).
Special Expatriate Tax Regime
Non-residents are taxed at a flat rate of 30%. Salaries and allowances for expatriate employees in foreign aid projects based on an agreement between the government of Bangladesh and a foreign government are exempt from tax.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
Bangladesh Double Tax Treaties
Withholding Taxes
Dividends: 20% (companies)/10% (resident individuals)/30% (non-resident individuals), Interests: 0 (residents)/20% (non-residents), Royalties: 10% (residents where the payment does not exceed BDT 2.5 million; otherwise, the rate is 12%)/20% (non-residents)
Bilateral Agreement
The United Kingdom and Bangladesh are bound by a double taxation treaty.

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Latest Update: November 2022

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