background image

Bangladesh Finance Act and Budget for 2018-19 Approved by Parliament — Orbitax Tax News & Alerts

The Bangladesh parliament approved the Finance Act 2018 and the Budget for 2018-19 on 27 and 28 June 2018, respectively. Some of the main tax-related measures include:

  • The corporate tax rates for banks and financial institutions are reduced by 2.5% to 37.5% for publicly-traded banks, insurance companies, financial institutions, and to 40% for non-publicly-traded banks, insurance companies, and financial institutions;
  • Tax rate changes are made for the readymade garment industry, including a reduction in the tax rate to 15% for manufacturers and exporters of readymade garments and to 12.5% if the taxpayer is a public limited company listed on the stock market, and an increase in the tax rate to 12% for any garment factory with green building certification;
  • The allowed deduction for expenditure for royalties, technical services fees, technical assistance fees or technical know-how fees, or any fee of a similar nature is set at 10% of the net profit disclosed in the statement of accounts for the first three years form the commencement of operation and 8% of the net profit for subsequent years;
  • A restriction is introduced on the deduction of salaries paid to employees if the annual statement of salaries is not submitted by 1 September each year;
  • VAT exemptions are introduced for various supplies, including the sale of agricultural land, the import of certain medicines and seeds for agriculture and animal feeding, domestic mobile phone and motorcycle manufacturing, port services for international flights, insurance agent commissions, and certain others.
  • New penalties are introduced for failing to file returns of tax deducted at source, the annual salary statement, and dividend and interest payment statements, or failing to display tax identification number at a place of business, including:
    • A penalty equal to the higher of 10% of the tax imposed in the last assessment of income or BDT 5,000, with an additional BDT 1,000 penalty per month of delay for returns of tax deducted at source and annual salary statements; and
    • BDT 5,000 plus an additional BDT 1,000 penalty per month of delay in other cases.
  • New rules are introduced regarding the furnishing of information to the tax authority, including new requirements for the automatic furnishing of information in a digital manner and the introduction of a penalty up to BDT 25,000 plus BDT 500 per day of delay for failing to furnish information without reasonable cause.

Click the following link for the Finance Act 2018 as published by the National Board of Revenue. The measures generally apply from 1 July 2018.