Overview of Tax system in Bangladesh
Income Tax Ordinance (1984) is used as a basic act in Bangladesh. Business tax and personal income tax is identified as income tax. The tax is paid based on Income Tax Rules (1984), which stipulates the implication rules and actual declaration procedures, and SROs from National Board of Revenue. Tax rate and tax regulation is revised every year and presented by Finance Acts/Ordinances.
Types of taxes:
①Business Income Tax
②Personal Income Tax
The characteristic of direct tax is that the person who has an obligation to pay taxes is same with the person who pays tax actually.
②Value Added Tax
The characteristic of indirect tax is that the person who has an obligation to pay taxes to pay the tax indirectly through other payers.
Personal Income Tax
In the case to calculate the personal income tax, firstly it is necessary to judge the person is resident or non-resident. In other words, to judge the person is resident or not is required because the scope of revenue to pay tax will be different.
The period to pay personal income tax is generally from July 1st to June 30th in the next year.
The resident of Bangladesh should satisfy one of the following conditions.
・ The stay in Bangladesh is more than 182 days continually.
・ The stay in Bangladesh is more than 90 days continually and the days for stay in the past four years are more than 365 days.
In the case of the residents of Bangladesh, the tax for income in Bangladesh and the income in other foreign countries will both be requested. And the part of tax for the income in foreign countries becomes the dual tax payable, so the amount of tax payable will be adjusted based on Foreign Tax Deduction by Bangladesh government.
Regarding the non-residents, the tax of income in Bangladesh is requested and the tax of income in other foreign countries is requested by other countries.
Business Income Tax
The corporations formatted based on Bangladesh demotic laws and the foreign corporations formatted based on foreign laws both have the obligation to pay Business Income Tax in Bangladesh.
The period to pay business income tax is generally from July 1st to June 30th in the next year. If there is specially reason for the business, it is possible to use special tax period with the permit of the authorities.
There are two ways to declare the business income tax, which are final declaration and medium declaration. All of the corporations must declare the amount of tax to the authorities and pay tax with setting the earlier one of deadline within six months from the last day of tax period or July 15th in the next year. In addition, final tax report must be attached to audited financial statements.
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