Corporate Income Tax Rate in Bangladesh 2024 । CA Ripon

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Understanding Corporate Income Tax (CIT) in Bangladesh

Corporate Income Tax Rate in Bangladesh 2024 – As a significant component of the country’s tax system, Corporate Income Tax (CIT) plays a vital role in generating government revenue. The landscape of income taxation in Bangladesh is divided into two main categories: Personal Income Tax (PIT) and Corporate Income Tax (CIT).

Corporate income tax includes a wide array of entities, including companies, banks, insurance, financial institutions, multinational corporations, branch offices, liaison offices, Associations of Persons (AOP), trust and other legal entities.

Deadline to submit Corporate Income Tax Return

Similar to individuals, corporations must also file their income tax returns by a specified deadline known as Tax Day. This deadline varies depending on the corporation’s accounting year, known as Income Year (IY). According to Section 2(23) of the Income Tax Act 2023, Tax Day falls on the 15th day of the 7th month following the end of the accounting year. However, if this date precedes September 15th, Tax Day is moved to September 15th.

The accounting year or Income Year (IY), as defined in Section 2(15) of the Income Tax Act 2023, differs for various types of entities:

– Local companies operate on an accounting year from July 1st to June 30th.

– Banking institutions, insurance companies, and financial entities, including their subsidiaries, follow a calendar year from January to December.

– Multinational corporations generally adhere to the aforementioned accounting periods but can adopt an alternative accounting year for consolidation purposes with their parent company, subject to approval by the Deputy Commissioner of Taxes (DCT).

It’s important to understand these details about the accounting year because Tax Day depends on when each company’s financial year ends. Basically, the deadline for submitting income tax returns is set up like this:

Nature of entity	Accounting year	Points to determine Tax Day	Examples	Tax Day
For Local companies	July – June	15th day of 7 months from the end of the accounting year	01 July 2022 to 30 June 2023	15-Jan-24
For Banks, insurance and financial institutions (including their subsidiary)	January – December	15th day of 7 months from the end of the accounting year but shall not fall before 15th Sep	01 Jan 2023 to 31 Dec 2023	15-Sep-24
For Multinational companies	Any period	15th day of 7 months from the end of the accounting year but shall not fall before 15th Sep	01 Jan 2023 to 31 Dec 2023 01 April 2022 to 30 March 2023	15-Sep-24 15-Oct-24

Notes:

1. Tax Day will be the 15th day of 7 Months however it will be 15 September if the said 15 day of 7 months fall before 15 September.
2. If the said 15th day of 7 months is Govt. Holiday then the next working day.

Corporate Income Tax Rate in Bangladesh 2024

Nature of Corporate Entity	Tax rate	Remarks	Reference	Changes
Listed companies with more than 10% paid-up capital raised through Initial Public Offering (IPO)	22.50%	The rate will be 20% if the conditions are met.	Finance Act 2024	Rate reduced by 2.5%
Listed companies with 10% or less paid-up capital raised through Initial Public Offering (IPO)	25%	The rate will be 22.50% if the conditions are met.	Finance Act 2024	Rate reduced by 2.5%
One person company (OPC)	22.50%	The rate will be 20% if the conditions are met.	Finance Act 2024	Rate reduced by 2.5%
Private Limited Companues (not publicly traded companies)	27.50%	The rate will be 25% if the conditions are met.	Finance Act 2024	Rate reduced by 2.5%
Listed banks, insurance, and finance companies (other than Merchant banks)	37.50%		Finance Act 2024	No Change
Unlisted banks, insurance, and finance companies (other than merchant banks)	40%		Finance Act 2024	No Change
Merchant banks	37.50%		Finance Act 2024	No Change
Tobacco manufacturing companies	45%	Plus 2.5% surcharge as Tobocco products	Finance Act 2024	No Change
Tobacco business	45%	Plus 2.5% surcharge as Tobocco products	Finance Act 2024	No Change
Mobile phone operators	45%		Finance Act 2024	No Change
Trust	27.50%	The rate will be 25% if the conditions are met.	Finance Act 2024	No Change
Approved Fund (Provident Fund, Gratuity Fund etc.)	15%		SRO No 156-Law/Income Tax-31/2024, dated 29 May 24	No Change
Association of Persons (AOP)	27.50%	The rate will be 25% if the conditions are met.	Finance Act 2024	No Change
Cooperatives Societies	20%		Finance Act 2024	Rate increased by 5%
Private Universities, Private Medical College, Private Dental College, Private Engineering College and Private College solely dedicated to imparting education on information and communication technology	15%		Finance Act 2024	No Change
Ready-made garment manufacturers and exporters	12%	10% if have green building certification.	SRO No 44-Law/Income Tax-25/2024, dated 4 March 24	No Change
Export-oriented companies	12%	10% if have green building certification.	SRO No 44-Law/Income Tax-25/2023, dated 4 March 24	No Change
Textile industries	15%		SRO No 159-Law/Income Tax/2022, dated 01 June 22	No Change
Jute goods exporters	10%		SRO No 304-Law/Income Tax-18/2023, dated 5 Nov 23	No Change
Banch and Liaison office	27.50%	The rate will be 25% if the conditions are met.	Finance Act 2024	Rate reduced by 2.5%
Artificial Juridical Persons	27.50%		Finance Act 2024	No Change

Qualifications for the 2.5% Tax Benefit

According to the Finance Act 2024, the following transactions must be executed through bank transfers to qualify for a 2.5% reduction in the tax rate:

- Any income and receipts, regardless of the amount.
- Expenses and investments that exceed BDT 500,000 for a single transaction and BDT 3,600,000 annually.

Adhering to this requirement results in a tax advantage where the corporate income tax rate applied to the taxpayer’s total income is reduced by an additional 2.5%, as outlined in the aforementioned table.

Fundamentally, this condition is designed to encourage corporations to conduct financial transactions through formal banking channels, thereby promoting greater financial transparency.

Corporate Capital Gain Tax Rate

As per Paragraph 1 of the 7th Schedule of the Income Tax Act 2023, companies are liable to pay a capital gain tax rate of 15%. This signifies that corporations are taxed at a reduced rate on their capital gain earnings.

Tax on Dividend Income of Corporate

As stated in Paragraph 2 of the 7th Schedule of Income Tax Act 2023, companies are subject to a dividend tax rate of 20%. Notably, there is a distinction in tax rates for corporate between regular business income, taxed at 25%, and dividend income, which enjoys a lower tax rate of 20%.

Minimum Tax Based on Gross Receipts

As outlined under Section 163(5) of the Income Tax Act 2023, corporate entities are required to pay an additional financial obligation known as the alternative minimum tax, which is determined based on their gross receipts. For the assessment year 2024-25, the applicable rates for minimum tax are as follows:

Sl No.	Classes of assessee	Rate of minimum tax
1	Manufacturer of cigarette, bidi, chewing tobacco, smokeless tobacco or any other tobacco products	3% of the gross receipts
2	Manufacturer of Carbonated Beverage and sweetened beverage	3% of the gross receipts
3	Mobile phone operator	2% of the gross receipts
4	Individual tax prayer other than Manufacturer of cigarette, bidi, chewing tobacco, smokeless tobacco or any other tobacco products	0.25% of the gross receipts
5	Any other cases	0.60% of the gross receipts

Notes:

Provided that, in the case of an industrial enterprise engaged in manufacturing goods, where serial no. 5 of the said schedule is applicable, the rate for the first 3 years of commercial production shall be 0.1% of such earnings.

Tax on disallowed expenses

According to Section 56 of the Income Tax Act 2023, any disallowance made under Section 55 will be treated as “Special Business Income,” and the company must pay tax on the disallowed amount at a standard rate of 25%. This requirement mandates tax payment on the disallowed expenses regardless of the company’s profit, loss, or the carrying forward and set-off of losses.

However, the disallowances of the expenses mentioned below will not be treated as “Special Business Income” under Section 56 of the Income Tax Act 2023.

- Any amount given to an employee as a perquisite exceeding Tk. 10 lakh [Ref – Clause (ঘ), Section 55];
- Expenses exceeding 10% of the disclosed net business profit shown in the financial statement for royalties, license fees, or technical service fees [Ref – Clause (ঙ), Section 55];
- Expenses exceeding 10% of the disclosed net business profit shown in the financial statement for head office or intra-group expenditures made by companies not registered in Bangladesh [Ref – Clause (চ), Section 55];
- Expenses related to foreign travel for business purposes exceeding 0.5% of the business turnover shown in the financial statement [Ref – Clause (ছ), Section 55];
- Entertainment expenses exceeding the amount as prescribed under Clause (জ) of Section 55 [Ref – Clause (জ), Section 55];
- Expenses related to free sample exceeding the amount as prescribed under Clause (ঝ) of Section 55 [Ref – Clause (ঝ), Section 55];
- Expenses exceeding 0.5% of the business turnover for promotional expenses other than advertising [Ref – Clause (ঞ), Section 55];
- Any deduction or provision created against any liability that is not clearly determined [Ref – Clause (থ), Section 55];
- Any depreciation allowance or interest deduction claimed for any asset’s Right of Use as per the International Financial Reporting Standard [Ref – Clause (ধ), Section 55];
- Impairment loss of assets [Ref – Clause (ন), Section 55] ;

Minimum Tax Due to TDS or TCS

According to Section 163(2) of the Income Tax Act 2023, a total of 40 sections pertaining to Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) are classified as minimum tax. This classification means that any tax amount collected or deducted under these specified sections is considered minimum tax when calculating corporate income tax liability.

For a detailed breakdown of section-wise TDS and TCS rates linked to minimum tax as outlined in Section 163 of the Income Tax Act 2023, please refer to the following article:

- TDS & TCS Sections linked with Minimum Tax

Special Provision to Legalize Undisclosed Assets

A new section, “Part 3 – Disclosure of Undisclosed Assets“ has been added to the First Schedule of the Income Tax Act 2023 through the Finance Act 2024.

Under this provision, irrespective of the Income Tax Act 2023 or any other law, no statutory government authority, including tax authorities, can question the source of the asset acquired. This is conditional upon the assessee paying a specified tax rate on undisclosed immovable property, such as establishments, flats, buildings, apartments, floor space and land, between July 1, 2024, and June 30, 2025 (inclusive), prior to filing the return or amended return for the assessment year 2024-25.

The Finance Act 2024 initially included provisions for legalizing undisclosed assets such as securities, cash, bank deposits, financial schemes and instruments, all forms of savings deposits, and other financial assets. However, this provision was later revoked by SRO No. 303-Law/Income Tax-46/2024, dated 2nd September 2024. As a result, only undisclosed establishments, flats, buildings, apartments, floor space, and land can now be disclosed by paying the rates specified under Clause 1 of Part 3 of the 1st Schedule of the Income Tax Act 2023.

Tax Rebate for Hiring Persons with Disabilities and Third-Gender Individuals

According to Part IV of the Second Schedule of the Finance Act 2024, any taxpayer employer who hires persons with disabilities and third-gender individuals will receive a specific tax rebate. The tax rebate rate will be as follows:

- If a taxpayer employer hires at least 10% of their total workforce or more than 25 employees from among persons with disabilities, the taxpayer will be granted a tax rebate of 5% of the payable tax or 75% of the total salary paid to the employees with disabilities, whichever is lower.
- If a taxpayer employer hires at least 10% of their total workforce or more than 25 employees from among third-gender individuals, the taxpayer will be granted a tax rebate of 5% of the payable tax or 75% of the total salary paid to the third-gender employees, whichever is lower.

Special Surcharge for all Institutions including Schools, Colleges, and Universities

According to Clause (খ) of Part II of the Second Schedule of the Finance Act 2024, if any educational institution, including schools, colleges, and universities, fails to make appropriate arrangements for the accessibility of persons with disabilities in compliance with the legal provisions in force in the country, a surcharge of 2.5% will be imposed on the income of the said institution.

Reduced Tax Rate for Income from Poultry, Hatchery and Fisheries

According to SRO No. 157-Law/Income Tax/2022, dated 01 June 2022, the income tax payable under the provisions of the Income Tax Act 2023 on income derived from duck and poultry farms, hatcheries for ducks, poultry, shrimp, and fish, and fish farming has been reduced and determined as follows, subject to compliance with the provisions of the said Act:

Income range	Reduced tax rate
Up to Tk. 1,000,000	Nil
On next Tk. 1,000,000	5%
On next Tk. 1,000,000	10%
On remaining income	15%

Tax Rate for Companies Engaged in Manufacturing or Providing Services in Economic Zones

According to the SRO No. 244-Law/Income Tax-38/2024, dated 27 June 2024, organizations operating their business (manufacturing goods or providing services) in economic zones have been granted tax exemptions.

Entities, engaged in manufacturing or providing services, operating within economic zones will receive following tax exemptions on income earned solely from business operations of those zones, subject to the conditions as mentioned in the said SRO:

From the start of commercial operations:

- 100% for the 1st, 2nd, and 3rd years
- 80% for the 4th year
- 70% for the 5th year
- 60% for the 6th year
- 50% for the 7th year
- 40% for the 8th year
- 30% for the 9th year, and
- 20% for the 10th year

It should be noted that to avail of the tax exemption benefits, business entities must comply with the conditions mentioned in the SRO.

Tax Rate for Companies Engaged in Manufacturing or Providing Services in High-Tech Parks

According to SRO No. 245-Law/Income Tax-39/2024, dated 27 June 2024, organizations operating in high-tech parks for the purpose of manufacturing goods or providing services have been granted tax exemptions.

Entities engaged in manufacturing or providing services within high-tech parks will receive following tax exemptions on income earned solely from business operations of those parks, subject to the conditions as mentioned in the said SRO:

From the start of commercial operations:

- 100% for the 1st, 2nd, 3rd, 4th, 5th, 6th, and 7th years, and
- 70% for the 8th, 9th, and 10th years

It should be noted that to avail of the tax exemption benefits, business entities must comply with the conditions mentioned in the SRO.

Other Tax Holiday details

Here is the few other tax holiday details where tax exemption allowed under certain circumstances:

SL	Details	Reference	Clause/ SRO Link
1	Industrial undertaking	Clause 2 of Part 4 of 6th Schedule	See Clause
2	IT Hardware Manufacturers	SRO 163-Law/Income Tax/2021, date: 03 June 2021	Download
3	Agro based industries	SRO 164-Law/Income Tax/2021, date: 03 June 2021	Download
4	Manufacturer of light engineering products	SRO 166 -Law/Income Tax/2021, date: 03 June 2021	Download
5	Manufacturer of certain home and kitchen appliances	SRO 167-Law/Income Tax/2021, date: 03 June 2021	Download
6	Educational and training institutions	SRO 168-Law/Income Tax/2021, date: 03 June 2021	Download
7	Private hospitals	SRO 169-Law/Income Tax/2021, date: 03 June 2021	Download
8	Companies engaged in production of three and four wheelers	SRO 170-Law/Income Tax/2021, date: 03 June 2021	Download

Conclusion - Corporate Income Tax Rate in Bangladesh 2024

This article provides an overview of the Corporate Income Tax Rate in Bangladesh 2024 (applicable for the assessment year 2024-2025). Tax regulations can change periodically, so it is crucial to remain updated with any revisions that may impact your tax liabilities. If you have any queries or seek further clarification, please feel free to post your questions in the comment section below. Our team is here to assist you with any concerns you may have regarding corporate taxation in Bangladesh.