Bangladesh

Tax incentive provisions normally have conditions applicable for the period within which the preferred activity should be undertaken and the period for which the tax incentive is available. It may also be necessary to fulfil certain other conditions, such as the ‘forming’ of a ‘new’ undertaking.

There are certain income-based and location-based incentives in Bangladesh. The major sectors are mentioned below.

Major income-based incentives:

• Power sector
• Export of goods
• Public private partnership
• ITeS
• Auto sector
• Industrial establishments engaged in specified activities
• Computer-based product manufacturing
• ICT manufacturing
• Healthcare industry
• Educational and training activities
• Agro-based industry
• Light engineering manufacturing
• Production of home and kitchen appliances
• Textiles
• Jute products

Major location-based incentives:

• Economic zones
• Hi-tech parks (HTPs)
• Export processing zones

Conditions to avail any tax exemption:

• Income tax return to be filed by the Tax Day.
• Appropriate tax deduction and tax collection should be done.
• Exempt income to be received through bank transfer.

Foreign tax credit

A Bangladeshi company is taxed on its global income. A foreign company is taxed only on income that is received in Bangladesh, or that accrues or arises, or is deemed to accrue or arise, in Bangladesh. This income is subject to any favourable DTAA provisions. Taxpayers can claim a credit for foreign taxes paid against their Bangladeshi tax liability, subject to the terms of international agreements. However, this credit is not available if the taxpayer is not a resident during the period on the basis of which such income is assessed. The credit is also limited to the amount of tax assessed at the average rate on double-taxed income.

Residents of Bangladesh who earn income outside the country and pay tax in that foreign country may be exempt from double taxation. The DCT can assess tax on such income at the lower of the average tax rates of Bangladesh or the foreign country. Claims for foreign tax credit must be made within two years of the tax year in which the income was chargeable in Bangladesh. However, this time limit does not apply if adjustments result in reassessment or refund claims due to DTAA provisions.

Double Taxation Avoidance Agreements (DTAAs) and WHTs

Agreements may exempt certain types of income earned by residents of contracting countries from Bangladeshi tax, with provisions for tax deduction at source.

A certificate from the Board is required to be obtained to apply the tax rate as per the DTAA.