Bangladesh

Every person responsible to deduct or collect tax is required to obtain a Withholder Identification Number.

There is an obligation on the payer (either resident or non-resident) of income to withhold tax when certain specified payments are credited and/or paid. Some of the expenses that require WHT are as follows.

In case of residents, the rate of WHT is increased by 50% of the applicable rate in case the payee fails to submit its proof of submission of return (PSR) to the payer.

Residents (i.e. where payee is a resident)

Deduction of tax from payment to contractors, suppliers, etc.

Deduction of tax from payment in respect of services

* For any service provided by a bank, insurance, financial institution, or any institution providing mobile financial services other than those mentioned in Sl. Nos. 1 to 18 of the table, the deduction of tax under this rule shall not be applicable

Deduction from payment on account of local Letter of Credit (LC)

Deduction of tax at source from interest on saving deposits, fixed deposits, etc.

Non-residents (i.e. where the payee is a non-resident)

Deduction of tax from the income of non-residents

Note that WHT does not to apply on certain following payments to non-residents, subject to conditions:

• Payment to any authority of a foreign state.
• Payment of subscription fee to a professional body.
• Liaison office expenses.
• International marketing and product development expenses.
• Tuition fees.
• Any kind of security deposit.

Where, in respect of any payment under this section, the Board, on an application made in this behalf, is satisfied that, due to a DTAA or any other reason, the non-resident is not liable to pay any tax in Bangladesh, or is liable to pay tax at a reduced rate in Bangladesh, the Board may issue a certificate within 30 days from the date of receipt of such application, along with all the documents as required by the Board, to the effect that the payment referred to shall be made without any deduction or, in applicable cases, with a deduction at the reduced rate as mentioned in the certificate.

In case of a non-resident payee, the tax deducted is considered as minimum tax, not eligible for a refund.

In case of capital gains arising in favour of a non-resident from the transfer of shares, the authority effecting the transfer of shares shall not effectuate the transfer unless tax on the capital gains has been paid.

Double Taxation Avoidance Agreement (DTAA) rates

Some DTAAs provide for lower WHT rates from certain types of income as follows:

Notes

1. If the beneficial owner is a company (other than a partnership) that directly holds at least 10% of the capital of the company paying the dividends.
2. If the beneficial owner is a company that directly holds at least 25% of the capital of the company paying the dividends.
3. If the beneficial owner is a company that directly holds at least 10% of the capital of the company paying the dividends.
4. If the beneficial owner is a company that directly or indirectly holds at least 10% of the capital of the company paying the dividends.
5. If the interest is derived by a bank or any other financial institution (including an insurance company).
6. If the beneficial owner is a company that owns at least 25% of the voting shares of the company paying the dividends during the period of six months immediately before the end of the accounting period for which the distribution of profit takes place.
7. Interest arising in the contracting state and paid to the resident of the other contracting state is taxable in the other contracting state.
8. Royalties arising in the contracting state and paid to the resident of the other contracting state are taxable in the other contracting state.
9. If the beneficial owner is a company (other than a partnership) that directly holds at least 25% of the capital of the company paying the dividends.
10. If the beneficial owner is a company (other than a partnership) that directly or indirectly holds at least 10% of the capital of the company paying the dividends.
11. If the beneficial owner is a company (other than a partnership) that directly holds at least 20% of the capital of the company paying the dividends.
12. If the interest is derived by any financial institution (including an insurance company).
13. If the beneficial owner is a company that directly or indirectly controls at least 10% of the voting power of the company paying the dividends.
14. If the beneficial owner is a company that owns at least 3% of the shares of the company paying the dividends.
15. If the beneficial owner is a company that directly or indirectly holds at least 10% of the voting stock of the company paying the dividends.
16. The ‘most favoured nation’ clause is applicable. The protocol to the DTAA limits the scope and rate of taxation to that specified in similar articles in DTAAs signed by Bangladesh with any other country.
17. As long as the Netherlands does not levy a tax at source on interest, then the rate of tax to be applied on the interest received by a bank or any other financial institution (including an insurance company) shall not exceed 7.5% of the gross amount of interest.
18. If the beneficial owner is a company that directly holds at least 3% of the capital of the company paying the dividends.
19. If the beneficial owner is a company that directly holds at least 10% of the capital of the company paying the dividends throughout a 365-day period that includes the day of the payment of the dividend (for the purpose of computing that period, changes of ownership that would directly result from a corporate reorganisation, such as a merger or divisive reorganisation, of the company that holds the shares or pays the dividend shall not be considered).